# ASC 360-10-40: Property, Plant, and Equipment — Overall — 40 Derecognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/360/10/#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): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:10371bc078a18745ffdb06f0316e36153f48e6851fd10f80a08e92de26f17d7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 360-10-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/360/10/#40-derecognition) SEC content: no ##### [360-10-40-1](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:baabf1a98ce4cbc5ba194c26f00278a024174d2fae086838b256971a6fbb7b0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Sale of Leased Property ##### [360-10-40-2](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-2) Pending content: yes Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:81e55dde14b048355a513e087a95bbc8e7bb65a6b5fb4cfa15044c5572d92e5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [840-20-40-5](https://asc.understandingaccounting.org/asc/840/20/#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](https://asc.understandingaccounting.org/asc/606/10/#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](https://asc.understandingaccounting.org/asc/105/10/#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](https://asc.understandingaccounting.org/updates/asu-2025-12/). ##### [360-10-40-3](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:4690fa0f28df0dda8a96cc609b1a72680e53126b1b7f212046a13ee0c75c8b08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Transfer or Sale of Property, Plant, and Equipment ##### [360-10-40-3A](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3A) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:f2e0b703495aa8e87173c7aca3034614ed32535b78ce4a0e4224de98b5de6c27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") shall be accounted for in accordance with Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from contracts with customers. ##### [360-10-40-3B](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3B) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:f52f6952a31fb795adc11a20b58889ab35313f6b79c7f945e075cbfa19d9d243 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall account for the derecognition of a subsidiary or group of assets that is either a [business](https://asc.understandingaccounting.org/glossary/b/#business "Paragraphs 805-10-55-3A805-10-55-4805-10-55-5805-10-55-6 and 805-10-55-8805-10-55-9 define what is considered a business.") or [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity.") in accordance with the derecognition guidance in Subtopic 810-10. ##### [360-10-40-3C](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3C) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:8c91610f9091321bc9a1601b205ba584bf64434069202414d1177c9548b743ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity transfers a nonfinancial asset in accordance with paragraph [360-10-40-3A](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3A), and the contract does not meet all of the criteria in paragraph [606-10-25-1](https://asc.understandingaccounting.org/asc/606/10/#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](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-6) to determine if and when the contract subsequently meets all the criteria in paragraph [606-10-25-1](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1). Until all the criteria in paragraph [606-10-25-1](https://asc.understandingaccounting.org/asc/606/10/#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](https://asc.understandingaccounting.org/asc/360/10/#360-10-45-9) 3. c Apply the impairment guidance in Section 360-10-35. ### Impairment or Disposal of Long-Lived Assets #### Long-Lived Assets to Be Exchanged or to Be Distributed to Owners in a Spinoff ##### [360-10-40-4](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:801baed88d5df1e97265ab862bebcd91b5c87ec1b1610da2291bd49c73376058 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/a/#asset-group "An asset group is the unit of accounting for a long-lived asset or assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.")) 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](https://asc.understandingaccounting.org/glossary/i/#impairment "Impairment is the condition that exists when the carrying amount of a long-lived asset (asset group) exceeds its fair value.") 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](https://asc.understandingaccounting.org/glossary/d/#disposal-group "A disposal group for a long-lived asset or assets to be disposed of by sale or otherwise represents assets to be disposed of together as a group in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction. A disposal group may include a discontinued operation along with other assets and liabilities that are not part of the discontinued operation.")) 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. #### Recognition of Gain or Loss from Sale ##### [360-10-40-5](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:3f2ca14bb0cdaca7e12c99be100998b389f47a3aff397abf96dec9eb0c4884c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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). #### Long-Lived Assets to Be Abandoned ##### [360-10-40-6](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:05:57.844Z to 2026-09-10T00:05:57.844Z Record version: sha256:96248d75c187102ef4ad930f8a386dc77a91afda320caf3456bc0d9a75791db3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [360-10-35-47 through 35-48](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-47) for guidance related to the disposition of an asset upon its abandonment.