{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/360/10/#40-derecognition","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"360","topic_title":"Property, Plant, and Equipment","subtopic":"360-10","subtopic_title":"Overall","section":{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"360-10-40-1","para":"40-1","html":"
Paragraph superseded by Accounting Standards Update No. 2014-09.
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Paragraph 840-20-40-5 states that if a sale to a third party of property subject to an operating lease (or of property that is leased by or intended to be leased by the third-party purchaser to another party) is not to be recorded as a sale because the entity has not transferred control over the promised asset to the third party in accordance with paragraph 606-10-25-30, the transaction shall be accounted for as a borrowing.
Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:
105-10-65-10
Editor's Note: Paragraph 360-10-40-2 will be superseded upon transition, together with its heading:
> Sale of Leased Property
Paragraph superseded by Accounting Standards Update No. 2025-12.
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Paragraph superseded by Accounting Standards Update No. 2014-09.
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An entity shall account for the derecognition of a nonfinancial asset, including an in substance nonfinancial asset and an asset subject to a lease , within the scope of this Topic in accordance with Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, unless a scope exception from Subtopic 610-20 applies. For example, the derecognition of a nonfinancial asset in a contract with a customer shall be accounted for in accordance with Topic 606 on revenue from contracts with customers.
","snippet":"An entity shall account for the derecognition of a nonfinancial asset, including an in substance nonfinancial asset and an asset subject to a lease , within the scope of this Topic in accordance with Subtopic 610-20 on g…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2e0b703495aa8e87173c7aca3034614ed32535b78ce4a0e4224de98b5de6c27","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}},{"citation":"360-10-40-3B","para":"40-3B","html":"
An entity shall account for the derecognition of a subsidiary or group of assets that is either a business or nonprofit activity in accordance with the derecognition guidance in Subtopic 810-10.
","snippet":"An entity shall account for the derecognition of a subsidiary or group of assets that is either a business or nonprofit activity in accordance with the derecognition guidance in Subtopic 810-10.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f52f6952a31fb795adc11a20b58889ab35313f6b79c7f945e075cbfa19d9d243","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}},{"citation":"360-10-40-3C","para":"40-3C","html":"
If an entity transfers a nonfinancial asset in accordance with paragraph 360-10-40-3A, and the contract does not meet all of the criteria in paragraph 606-10-25-1, the entity shall not derecognize the nonfinancial asset and shall follow the guidance in paragraphs
606-10-25-6 through 25-8
to determine if and when the contract subsequently meets all the criteria in paragraph 606-10-25-1. Until all the criteria in paragraph 606-10-25-1 are met, the entity shall continue to do all of the following:
  1. a
    Report the nonfinancial asset in its financial statements
  2. b
    Recognize depreciation expense as a period cost unless the assets have been classified as held for sale in accordance with paragraphs
    360-10-45-9 through 45-10
  3. c
    Apply the impairment guidance in Section 360-10-35.
","snippet":"If an entity transfers a nonfinancial asset in accordance with paragraph 360-10-40-3A, and the contract does not meet all of the criteria in paragraph 606-10-25-1, the entity shall not derecognize the nonfinancial asset …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8c91610f9091321bc9a1601b205ba584bf64434069202414d1177c9548b743ba","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:97d1c9ba00d6c94cc92fed03220ab37cc87e35ac970199ed845b2a219495dbef","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}},{"block":"Impairment or Disposal of Long-Lived Assets","heading":"Long-Lived Assets to Be Exchanged or to Be Distributed to Owners in a Spinoff","paragraphs":[{"citation":"360-10-40-4","para":"40-4","html":"
For purposes of this Subtopic, a long-lived asset to be disposed of in an exchange measured based on the recorded amount of the nonmonetary asset relinquished or to be distributed to owners in a spinoff is disposed of when it is exchanged or distributed. If the asset (asset group) is tested for recoverability while it is classified as held and used, the estimates of future cash flows used in that test shall be based on the use of the asset for its remaining useful life, assuming that the disposal transaction will not occur. In such a case, an undiscounted cash flows recoverability test shall apply prior to the disposal date. In addition to any impairment losses required to be recognized while the asset is classified as held and used, an impairment loss, if any, shall be recognized when the asset is disposed of if the carrying amount of the asset (disposal group) exceeds its fair value. The provisions of this Section apply to nonmonetary exchanges that are not recorded at fair value under the provisions of Topic 845.
","snippet":"For purposes of this Subtopic, a long-lived asset to be disposed of in an exchange measured based on the recorded amount of the nonmonetary asset relinquished or to be distributed to owners in a spinoff is disposed of wh…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:801baed88d5df1e97265ab862bebcd91b5c87ec1b1610da2291bd49c73376058","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:20c050df5da5ee989ec8855fedc6ba5498563e61d8ffa0a172d45fa939f2796d","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}},{"block":"Impairment or Disposal of Long-Lived Assets","heading":"Recognition of Gain or Loss from Sale","paragraphs":[{"citation":"360-10-40-5","para":"40-5","html":"
A gain or loss not previously recognized that results from the sale of a long-lived asset (disposal group) shall be recognized when the long-lived asset (disposal group) is derecognized in accordance with applicable Topics (for example, Topic 610 on other income, Topic 810 on consolidation, or Topic 860 on transfers and servicing).
","snippet":"A gain or loss not previously recognized that results from the sale of a long-lived asset (disposal group) shall be recognized when the long-lived asset (disposal group) is derecognized in accordance with applicable Topi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f2ca14bb0cdaca7e12c99be100998b389f47a3aff397abf96dec9eb0c4884c3","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2a3c44c9d67876934c9b09ded31512b7837c27dab60e68c13a1fc8d79d657331","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}},{"block":"Impairment or Disposal of Long-Lived Assets","heading":"Long-Lived Assets to Be Abandoned","paragraphs":[{"citation":"360-10-40-6","para":"40-6","html":"
See paragraphs
360-10-35-47 through 35-48
for guidance related to the disposition of an asset upon its abandonment.
","snippet":"See paragraphs 360-10-35-47 through 35-48 for guidance related to the disposition of an asset upon its abandonment.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:96248d75c187102ef4ad930f8a386dc77a91afda320caf3456bc0d9a75791db3","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6b42daaa093389137ee0f22575ae27f53046198d3fdbea1e92588c4818846dd9","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10371bc078a18745ffdb06f0316e36153f48e6851fd10f80a08e92de26f17d7a","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10371bc078a18745ffdb06f0316e36153f48e6851fd10f80a08e92de26f17d7a","downloaded_from":"2026-09-10T00:05:57.844Z","last_downloaded_at":"2026-09-10T00:05:57.844Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482161","source_sha256":"02b4a5dca0540ec5b72351dfb93025a7cdc5c8e1fee262005ddbd9af571a90db"}}