# ASC 320-10-40: Investments—Debt Securities — Overall — 40 Derecognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/320/10/#40-derecognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:34:55.996Z to 2026-09-09T23:34:55.996Z Record version: sha256:0aaf48bb819d9ce663b48c0dc6cb7739e665c7513afdb7e05ad67d61c913e877 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 320-10-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/320/10/#40-derecognition) SEC content: no #### Accounting for Sales of Securities ##### [320-10-40-1](https://asc.understandingaccounting.org/asc/320/10/#320-10-40-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:34:55.996Z to 2026-09-09T23:34:55.996Z Record version: sha256:6b22e0abca3b643096b1ec0d943927fc08cb547cd35650674052ca90b57073cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 860-10-40 provides guidance on determining whether a transfer of [securities](https://asc.understandingaccounting.org/glossary/s/#security "A share, participation, or other interest in property or in an entity of the issuer or an obligation of the issuer that has all of the following characteristics: It is either represented by an instrument issued in bearer or registered form or, if not represented by an instrument, is registered in books maintained to record transfers by or on behalf of the issuer. It is of a type commonly dealt in on securities exchanges or markets or, when represented by an instrument, is commonly recognized in any area in which it is issued or dealt in as a medium for investment. It either is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations.") shall be accounted for as a sale. With respect to [trading securities](https://asc.understandingaccounting.org/glossary/t/#trading-securities "Securities that are bought and held principally for the purpose of selling them in the near term and therefore held for only a short period of time. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price."), because all changes in a trading security's [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") are reported in earnings as they occur, the sale of a trading security does not necessarily give rise to a gain or loss. Generally, a debit to cash (or trade date receivable) is recorded for the sales proceeds, and a credit is recorded to remove the security at its fair value (or sales price). If the entity is not taxed on the changes in fair value, the deferred tax accounts would be adjusted. Some adjustment to this procedure will be necessary for entities that have not yet recorded the security's change in fair value up to the point of sale (perhaps because fair value changes are recorded at the end of each day). ##### [320-10-40-2](https://asc.understandingaccounting.org/asc/320/10/#320-10-40-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:34:55.996Z to 2026-09-09T23:34:55.996Z Record version: sha256:f4432ec051f3bdd51612b1db9c0546a52ff3b1a65ea5d4aec0150880f6010d20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although entities have different bookkeeping methods for [available-for-sale securities](https://asc.understandingaccounting.org/glossary/a/#available-for-sale-securities "Investments not classified as either trading securities or as held-to-maturity securities."), generally, a sale of an available-for-sale security shall be recorded by a debit to cash (or trade date receivable) for the sales proceeds, and a credit to remove the security at its fair value (or sales price). The amount recorded in other comprehensive income, representing the unrealized gain or loss at the date of sale, is reversed into earnings, and the deferred tax accounts are adjusted. Some adjustment to this procedure will be necessary for entities that have not yet recorded the security's change in fair value up to the point of sale (perhaps because fair value changes are recorded at the end of each interim period) or when write-downs have been recognized. #### Sales of Combinations of Structured Notes ##### [320-10-40-3](https://asc.understandingaccounting.org/asc/320/10/#320-10-40-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:34:55.996Z to 2026-09-09T23:34:55.996Z Record version: sha256:228000c6876b3bcefabadfff86e50bdaba6e23e81e96615d9ffccc331b611bee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As discussed in paragraph [320-10-25-20](https://asc.understandingaccounting.org/asc/320/10/#320-10-25-20), if [structured notes](https://asc.understandingaccounting.org/glossary/s/#structured-note "A debt instrument whose cash flows are linked to the movement in one or more indexes, interest rates, foreign exchange rates, commodities prices, prepayment rates, or other market variables. Structured notes are issued by U.S. government-sponsored enterprises, multilateral development banks, municipalities, and private entities. The notes typically contain embedded (but not separable or detachable) forward components or option components such as caps, calls, and floors. Contractual cash flows for principal, interest, or both can vary in amount and timing throughout the life of the note based on nontraditional indexes or nontraditional uses of traditional interest rates or indexes.") are acquired for the type of specified investment strategy described in paragraph [320-10-25-19](https://asc.understandingaccounting.org/asc/320/10/#320-10-25-19), then the investor should account for the two structured note securities as a unit until one of the securities is sold, at which time the notes shall be measured in the same way as a participating interest in paragraph [860-20-40-1A](https://asc.understandingaccounting.org/asc/860/20/#860-20-40-1A).