# ASC 610-20-15: Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets — 15 Scope and Scope Exceptions

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/610/20/#15-scope-and-scope-exceptions)

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## ASC 610-20-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/610/20/#15-scope-and-scope-exceptions)

SEC content: no

#### Entities

##### [610-20-15-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-1)

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The guidance in this Subtopic applies to all entities.

#### Transactions

##### [610-20-15-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-2)

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Except as described in paragraph [610-20-15-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-4), the guidance in this Subtopic applies to gains or losses recognized upon the derecognition of nonfinancial assets and [in substance nonfinancial assets](https://asc.understandingaccounting.org/glossary/i/#in-substance-nonfinancial-asset "Paragraphs 610-20-15-5610-20-15-6610-20-15-7610-20-15-8 define an in substance nonfinancial asset."). Nonfinancial assets within the scope of this Subtopic include [intangible assets](https://asc.understandingaccounting.org/glossary/i/#intangible-assets "Assets (not including financial assets) that lack physical substance. (The term intangible assets is used to refer to intangible assets other than goodwill.)"), land, buildings, or materials and supplies and may have a zero carrying value. In substance nonfinancial assets are described in paragraphs

[610-20-15-5 through 15-8](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-5)

.

1.  a
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).
    
2.  b
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).

##### [610-20-15-3](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-3)

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The guidance in this Subtopic applies to a transfer of an ownership interest (or a [variable interest](https://asc.understandingaccounting.org/glossary/v/#variable-interests "The investments or other interests that will absorb portions of a variable interest entity's (VIE's) expected losses or receive portions of the entity's expected residual returns are called variable interests. Variable interests in a VIE are contractual, ownership, or other pecuniary interests in a VIE that change with changes in the fair value of the VIE's net assets exclusive of variable interests. Equity interests with or without voting rights are considered variable interests if the legal entity is a VIE and to the extent that the investment is at risk as described in paragraph 810-10-15-14. Paragraph 810-10-25-55 explains how to determine whether a variable interest in specified assets of a legal entity is a variable interest in the entity. Paragraphs 810-10-55-16810-10-55-17810-10-55-18810-10-55-19810-10-55-20810-10-55-21810-10-55-22810-10-55-23810-10-55-24810-10-55-25810-10-55-26810-10-55-27810-10-55-28810-10-55-29810-10-55-30810-10-55-31810-10-55-32810-10-55-33810-10-55-34810-10-55-35810-10-55-36810-10-55-37810-10-55-38810-10-55-39810-10-55-40810-10-55-41 describe various types of variable interests and explain in general how they may affect the determination of the primary beneficiary of a VIE.")) in a consolidated [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") (that is not 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.")) only if all of the assets in the subsidiary are nonfinancial assets and/or in substance nonfinancial assets.

1.  a
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).
    
2.  b
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).
    
3.  c
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).
    
4.  d
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).
    
5.  e
    
    [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).

##### [610-20-15-3A](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-3A)

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Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:

[606-10-65-3](https://asc.understandingaccounting.org/asc/606/10/#606-10-65-3)An entity shall apply the guidance in this Subtopic, including the guidance on noncash consideration in paragraphs [610-20-32-3(a)(4)](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-3) and [610-20-32-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-4), to a contract with share-based noncash consideration (for example, shares, share options, or other equity instruments) from a counterparty for the transfer of nonfinancial assets or in substance nonfinancial assets. The guidance in other Topics (including Topic 815 on derivatives and hedging and Topic 321 on equity securities) does not apply to share-based noncash consideration from a counterparty for the transfer of nonfinancial assets or in substance nonfinancial assets unless and until the entity’s right to receive or retain the share-based noncash consideration is unconditional under this Subtopic. To assess whether the right is unconditional under this Subtopic, only the contract terms that relate to the entity’s transfer of nonfinancial assets or in substance nonfinancial assets (or a specific outcome of the entity’s transfer) within the scope of this Subtopic are evaluated. The determination of whether the right is unconditional is consistent with the guidance in paragraph [606-10-45-4](https://asc.understandingaccounting.org/asc/606/10/#606-10-45-4), which states that a right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

##### [610-20-15-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-4)

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The guidance in this Subtopic does not apply to the following:

1.  a
    
    A transfer of a nonfinancial asset or an in substance 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."), see 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
    
2.  b
    
    A transfer of a subsidiary or group of assets that constitutes 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."), see Section 810-10-40 on consolidation
    
3.  c
    
    Sale and leaseback transactions within the scope of Subtopic 842-40 on leases
    
4.  d
    
    A conveyance of oil and gas mineral rights within the scope of Subtopic 932-360 on extractive activities—oil and gas
    
5.  e
    
    A transaction that is entirely accounted for in accordance with Topic 860 on transfers and servicing (for example, a transfer of investments accounted for under Topic 320 on investments—debt securities, Topic 321 on investments—equity securities, Topic 323 on investments—equity method and [joint ventures](https://asc.understandingaccounting.org/glossary/j/#joint-venture "An entity owned and operated by a small group of businesses (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a joint venture frequently is to share risks and rewards in developing a new market, product, or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a joint venture. The ownership of a joint venture seldom changes, and its equity interests usually are not traded publicly. A minority public ownership, however, does not preclude an entity from being a joint venture. As distinguished from a corporate joint venture, a joint venture is not limited to corporate entities."), Topic 325 on investments—other, Topic 815 on derivatives and hedging, and Topic 825 on financial instruments)
    
6.  f
    
    A transfer of nonfinancial assets that is part of the consideration in a business combination within the scope of Topic 805 on business combinations, see paragraph [805-30-30-8](https://asc.understandingaccounting.org/asc/805/30/#805-30-30-8)
    
7.  g
    
    A nonmonetary transaction within the scope of Topic 845 on nonmonetary transactions
    
8.  h
    
    A lease contract within the scope of Topic 842 on leases
    
9.  i
    
    An exchange of takeoff and landing slots within the scope of Subtopic 908-350 on airlines—intangibles
    
10.  j
     
     A contribution of [cash](https://asc.understandingaccounting.org/glossary/c/#cash "Consistent with common usage, cash includes not only currency on hand but demand deposits with banks or other financial institutions. Cash also includes other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. All charges and credits to those accounts are cash receipts or payments to both the entity owning the account and the bank holding it. For example, a bank's granting of a loan by crediting the proceeds to a customer's demand deposit account is a cash payment by the bank and a cash receipt of the customer when the entry is made.") and other assets, including a promise to give, within the scope of Subtopic 720-25 on other expenses—contributions made or within the scope of Subtopic 958-605 on not-for-profit entities—revenue recognition
     
11.  k
     
     A transfer of an investment in a venture that is accounted for by proportionately consolidating the assets, liabilities, revenues, and expenses of the venture as described in paragraph [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14)
     
12.  l
     
     A transfer of nonfinancial assets or in substance nonfinancial assets solely between entities or persons under common control, such as between a [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") and its subsidiaries or between two subsidiaries of the same parent.

#### In Substance Nonfinancial Assets

##### [610-20-15-5](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-5)

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An [in substance nonfinancial asset](https://asc.understandingaccounting.org/glossary/i/#in-substance-nonfinancial-asset "Paragraphs 610-20-15-5610-20-15-6610-20-15-7610-20-15-8 define an in substance nonfinancial asset.") is a financial asset (for example, a receivable) promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to a counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty in the contract are in substance nonfinancial assets. For purposes of this evaluation, when a contract includes the transfer of ownership interests in one or more consolidated [subsidiaries](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") that is not a business, an entity shall evaluate the underlying assets in those subsidiaries.

##### [610-20-15-6](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-6)

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When a contract includes the transfer of ownership interests in one or more consolidated subsidiaries that is not a business, and substantially all of the fair value of the assets promised to a counterparty in the contract is not concentrated in nonfinancial assets, an entity shall evaluate whether substantially all of the fair value of the assets promised to the counterparty in an individual subsidiary within the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets in an individual subsidiary is concentrated in nonfinancial assets, then the financial assets in that subsidiary are in substance nonfinancial assets. (See Case C of Example 1 in paragraphs

[610-20-55-9 through 55-10](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-9)

.)

##### [610-20-15-7](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-7)

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When determining whether substantially all of the fair value of the assets promised to a counterparty in a contract (or an individual consolidated subsidiary within a contract) is concentrated in nonfinancial assets, [cash](https://asc.understandingaccounting.org/glossary/c/#cash "Consistent with common usage, cash includes not only currency on hand but demand deposits with banks or other financial institutions. Cash also includes other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. All charges and credits to those accounts are cash receipts or payments to both the entity owning the account and the bank holding it. For example, a bank's granting of a loan by crediting the proceeds to a customer's demand deposit account is a cash payment by the bank and a cash receipt of the customer when the entry is made.") or [cash equivalents](https://asc.understandingaccounting.org/glossary/c/#cash-equivalents "Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year U.S. Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations).") promised to the counterparty shall be excluded. Also, any liabilities assumed or relieved by the counterparty shall not affect the determination of whether substantially all of the fair value of the assets transferred is concentrated in nonfinancial assets.

##### [610-20-15-8](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-8)

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If all of the assets promised to a counterparty in an individual consolidated subsidiary within a contract are not nonfinancial assets and/or in substance nonfinancial assets, an entity shall apply the guidance in paragraph [810-10-40-3A(c)](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A) or [810-10-45-21A(b)(2)](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-21A) to determine the guidance applicable to that subsidiary.

#### Contracts Partially within the Scope of Other Topics

##### [610-20-15-9](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-9)

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If the promises to a counterparty in a contract are not all nonfinancial assets or all nonfinancial assets and in substance nonfinancial assets, a contract may be partially within the scope of this Subtopic and partially within the scope of other Topics. For example, in addition to transferring nonfinancial assets and in substance nonfinancial assets that are within the scope of this Subtopic, an entity may issue a guarantee to the counterparty that is within the scope of Topic 460 on guarantees. An entity shall apply the guidance in paragraph [606-10-15-4](https://asc.understandingaccounting.org/asc/606/10/#606-10-15-4) to determine how to separate and measure one or more parts of a contract that are within the scope of other Topics. (See also Case A of Example 1 in paragraphs

[610-20-55-2 through 55-5](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-2)

and Case C of Example 1 in paragraphs

[610-20-55-9 through 55-10](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-9)

.)

#### Decision Tree

##### [610-20-15-10](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-10)

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The following decision tree depicts the process for evaluating whether assets promised to a counterparty in a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") (or parts of a contract) shall be derecognized within the scope of this Subtopic. The decision tree is not intended as a substitute for the guidance in this Subtopic.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-0827221F-C0A5-4C11-8B8A-28BD39929DF0-low.gif)
    
    "Is the counterparty a customer? (610-20-15-4(a))" 1 "Is the transaction the transfer of a business or nonprofit activity? (610-20-15-4(b))" 1 Is the transaction entirely accounted for in accordance with Topic 860? (610-20-15-4(e)) 1 "Does another scope exception apply? (610-20-15-4)" 1 Apply Topic 606 1 Apply Subtopic 810-10 1 Apply Topic 860 1 Apply other Topics or Subtopics 1 "Does the contract include the transfer of an ownership interest in one or more consolidated subsidiaries? (610-20-15-6)" 1 "Are the assets promised in the contract all nonfinancial assets or all nonfinancial assets and in substance nonfinancial assets? (610-20-15-5)" 1 "Apply Subtopic 610-20 to each distinct asset promised in the contract. Apply other Topics or Subtopics to the remaining parts of the contract, if any.1" 1 1 1 "Apply Subtopic 610-20 to each distinct nonfinancial asset promised in the contract. Apply other Topics or Subtopics to the remaining parts of the contract, if any.1" 1 "If the assets in an individual consolidated subsidiary are all nonfinancial assets or all nonfinancial assets and in substance nonfinancial assets, then apply Subtopic 610-20 to each distinct asset within that subsidiary. Otherwise, apply paragraph 810-10-40-3A(c) or 810-10-45-21A(b)(2) to the subsidiary. Apply other Topics or Subtopics to the remaining parts of the contract, if any.1" 1