APB Opinion No. 30 states that the discontinuance of a part of a segment of a business, that is the phasing out of a product line or class of service, or a shift in production or marketing emphasis or location is incidental to the evolution of an entity and, accordingly, does not qualify for treatment as a discontinued operation. Although in theory the criteria may seem straightforward, accountants have had difficulty interpreting these broad criteria in practice. Recognizing this difficulty, the American Institute of Certified Public Accountants (AICPA) issued “Accounting Interpretation of APB Opinion No. 30” in November 1973 to provide guidance on the classifications found in Opinion No. 30. The interpretations provide the following examples as situations that qualify as discontinued operations:

1. The sale of a major division that represents an entity’s only activity in a specific industry; the assets and results of operations of the division are clearly separable.

2. The sale by a meat-packing company of a 25 percent interest in a professional ball club that they had accounted for under the equity method.

3. The sale by a communications company of all its radio stations (constituting 30 percent of total consolidated revenues). The remaining activities are television stations and a publishing company. The assets and results of operations of the radio station are clearly separable both physically and operationally.

4. The disposal by a food distributor of one of its two food divisions, which use significantly different channels of distribution. One division sells food wholesale primarily to supermarket chains, and the other division sells food through its chain of fast food restaurants, some of which are franchised and some of which are company-owned. Although both divisions are in the business of distribution of food, the sale of food through fast food outlets is vastly different in nature from wholesaling food to supermarket chains. Thus, by having two major classes of customers, the company has two segments of business.

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