{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/610/20/#55-implementation-guidance-and-illustrations","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":"610","topic_title":"Other Income","subtopic":"610-20","subtopic_title":"Gains and Losses from the Derecognition of Nonfinancial Assets","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"610-20-55-1","para":"55-1","html":"
The following Examples illustrate the guidance in this Subtopic.
","snippet":"The following Examples illustrate the guidance in this Subtopic.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7169dea24d04a72284eeba3f37450f102fcd04dd8d7397c9fb99d813ea450d5c","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-2","para":"55-2","html":"
Seller enters into a contract to transfer real estate, the related operating leases, and accounts receivable to Buyer. Seller guarantees Buyer that the cash flows of the property will be sufficient to meet all of the operating needs of the property for two years after the sale. In the event that the cash flows are not sufficient, Seller is required to make a payment in the amount of the shortfall.
","snippet":"Seller enters into a contract to transfer real estate, the related operating leases, and accounts receivable to Buyer. Seller guarantees Buyer that the cash flows of the property will be sufficient to meet all of the ope…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:125e2e444632727df724ce157c25ddf50f8ab5e63db9513708161e76410685dd","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-3","para":"55-3","html":"
Seller concludes that the assets promised in the contract are not a business within the scope of Topic 810 on consolidation and are not an output of Seller's ordinary activities within the scope of Topic 606 on revenue from contracts with customers. In addition, assume that Seller concludes that substantially all of the fair value of the assets promised in the contract is concentrated in nonfinancial assets (that is, substantially all of the fair value is concentrated in the real estate and in-place lease intangible assets). Therefore, the accounts receivable promised in the contract are in substance nonfinancial assets. In accordance with the guidance in this Subtopic, all of the assets in the contract, including the accounts receivable, are within the scope of this Subtopic.
","snippet":"Seller concludes that the assets promised in the contract are not a business within the scope of Topic 810 on consolidation and are not an output of Seller's ordinary activities within the scope of Topic 606 on revenue f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10a1b9f43398184ee4f8c6d15a324ab0c037908d5d450b27557f58d83d8be279","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-4","para":"55-4","html":"
Seller concludes that the guarantee, which is a liability of Seller, is within the scope of Topic 460 on guarantees. Therefore, Seller would apply the guidance in paragraph 606-10-15-4 to separate and measure the guarantee as described in paragraph 610-20-15-9.
","snippet":"Seller concludes that the guarantee, which is a liability of Seller, is within the scope of Topic 460 on guarantees. Therefore, Seller would apply the guidance in paragraph 606-10-15-4 to separate and measure the guarant…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f0a32b025fb2177482c65a2de3274a8fbcd104eb39a38641a79c0fb589b038cc","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-5","para":"55-5","html":"
Seller's conclusions would be the same if it transferred the real estate, leases, and receivables by transferring ownership interests in a consolidated subsidiary. That is, Seller would still conclude that all of the assets in the subsidiary are nonfinancial assets and in substance nonfinancial assets within the scope of this Subtopic and that the guarantee is within the scope of Topic 460.
","snippet":"Seller's conclusions would be the same if it transferred the real estate, leases, and receivables by transferring ownership interests in a consolidated subsidiary. That is, Seller would still conclude that all of the ass…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05dfc56201da426c2bb1016fb3ca26ec3b1a9cc44854e3f8a37f3ac9cf8cfef7","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-6","para":"55-6","html":"
Entity X enters into a contract to transfer machinery and financial assets, both of which have significant fair value. Entity X concludes that the assets promised in the contract are not a business within the scope of Topic 810 and are not an output of the entity's ordinary activities within the scope of Topic 606. Entity X also concludes that substantially all of the fair value of the assets promised in the contract is not concentrated in nonfinancial assets. Therefore, the financial assets promised in the contract are not in substance nonfinancial assets.
","snippet":"Entity X enters into a contract to transfer machinery and financial assets, both of which have significant fair value. Entity X concludes that the assets promised in the contract are not a business within the scope of To…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1abaa196512f853d40a31f3eaa2c8863bd6d9cbc7ac67c9900bc189cccf046b6","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-7","para":"55-7","html":"
In accordance with the guidance in paragraph 610-20-15-9, Entity X should derecognize only the machinery in accordance with this Subtopic. Entity X should apply the guidance in paragraph 606-10-15-4 to separate and measure the financial assets.
","snippet":"In accordance with the guidance in paragraph 610-20-15-9, Entity X should derecognize only the machinery in accordance with this Subtopic. Entity X should apply the guidance in paragraph 606-10-15-4 to separate and measu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89ef66d996037c873be02bfb204fd261ae0ace6223aa031966c916e94b9ba2ef","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-8","para":"55-8","html":"
If Entity X transfers the machinery and financial assets by transferring ownership interests in a consolidated subsidiary, it would still conclude that the financial assets are not in substance nonfinancial assets. As described in paragraph 610-20-15-8, if all of the assets promised to the counterparty in an individual consolidated subsidiary within a contract are not nonfinancial assets and/or in substance nonfinancial assets, those assets should not be derecognized in accordance with this Subtopic. Instead, Entity X should apply the guidance in paragraph 810-10-40-3A(c) or 810-10-45-21A(b)(2) to determine the guidance applicable to that subsidiary.
","snippet":"If Entity X transfers the machinery and financial assets by transferring ownership interests in a consolidated subsidiary, it would still conclude that the financial assets are not in substance nonfinancial assets. As de…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de62aebf5477b63b7182fc14b1aa25eb3b5975b80ad02cefe1661a7b0029198d","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-9","para":"55-9","html":"
Entity A enters into a contract to transfer ownership interests in two consolidated subsidiaries to a single counterparty. Subsidiary 1 consists entirely of nonfinancial assets, and Subsidiary 2 consists entirely of financial assets. Assume that the assets in Subsidiary 1 and Subsidiary 2 have an equal amount of fair value. Entity A concludes that the transaction is not the transfer of a business within the scope of Topic 810 and that the subsidiaries are not outputs of the entity's ordinary activities within the scope of Topic 606.
","snippet":"Entity A enters into a contract to transfer ownership interests in two consolidated subsidiaries to a single counterparty. Subsidiary 1 consists entirely of nonfinancial assets, and Subsidiary 2 consists entirely of fina…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47a53545465d814565f508ab62c9afdb89de8488058c1ea64d20716ac5e539a9","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-10","para":"55-10","html":"
Entity A first considers whether substantially all of the fair value of the assets promised to the counterparty in the contract is concentrated in nonfinancial assets. Because the contract includes the transfer of ownership interests in one or more consolidated subsidiaries, Entity A evaluates the underlying assets in those subsidiaries. Entity A concludes that because both the financial assets and nonfinancial assets have an equal amount of fair value, substantially all of the fair value of the assets promised to the counterparty in the contract is not concentrated in nonfinancial assets. Entity A next considers whether substantially all of the fair value of the assets within Subsidiary 1 or Subsidiary 2 is concentrated in nonfinancial assets. Because the assets transferred within Subsidiary 1 are entirely nonfinancial assets, Entity A concludes that those assets are within the scope of this Subtopic. Entity A also concludes that the financial assets in Subsidiary 2 are not in substance nonfinancial assets and, therefore, are not within the scope of this Subtopic. Entity A should apply the guidance in paragraph 606-10-15-4 to separate and measure the financial assets in Subsidiary 2 from the nonfinancial assets in Subsidiary 1 that are derecognized within the scope of this Subtopic.
","snippet":"Entity A first considers whether substantially all of the fair value of the assets promised to the counterparty in the contract is concentrated in nonfinancial assets. Because the contract includes the transfer of owners…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8eb96e17db7144b1ec36a4837d0b681d3665abae052dfd5b8a7d874e18f6a456","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-11","para":"55-11","html":"
Entity A owns 100 percent of Entity B, a consolidated subsidiary. Entity B holds title to land with a carrying amount of $5 million. Entity A concludes that the land is not an output of its ordinary activities within the scope of Topic 606 and that Entity B does not meet the definition of a business within the scope of Topic 810.
","snippet":"Entity A owns 100 percent of Entity B, a consolidated subsidiary. Entity B holds title to land with a carrying amount of $5 million. Entity A concludes that the land is not an output of its ordinary activities within the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a534acbb8bb46aed51d26686486360d81da8277177ccfde313ef9f2edca3fcbd","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-12","para":"55-12","html":"
Entity A enters into a contract to transfer 60 percent of Entity B to Entity X for $6 million cash due at contract inception. For ease of illustration, assume that at contract inception the fair value of the 40 percent interest retained by Entity A is $4 million. Because all of the assets (the land) promised to Entity X in the contract are nonfinancial assets, Entity A concludes that it should derecognize the land in accordance with this Subtopic.
","snippet":"Entity A enters into a contract to transfer 60 percent of Entity B to Entity X for $6 million cash due at contract inception. For ease of illustration, assume that at contract inception the fair value of the 40 percent i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d18aaea1fa594e05f5bf847d304c94ae61245974f0fe62225325d6b7c3a7fca","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-13","para":"55-13","html":"
As described in paragraphs
610-20-25-2 through 25-7
, Entity A first considers the guidance in Topic 810 and concludes that it no longer has a controlling financial interest in Entity B or in Entity X (the buyer). Entity A then determines that the contract meets the criteria in paragraph 606-10-25-1 and that control of the land has been transferred in accordance with the guidance in paragraph 606-10-25-30. Because Entity A continues to have a noncontrolling interest in Entity B, it evaluates the point in time at which Entity B, its former subsidiary, has control of the distinct nonfinancial asset as described in paragraph 610-20-25-7. Entity A concludes that it has transferred control of the distinct nonfinancial asset because Entity B controls the distinct nonfinancial asset. When evaluating the indicators of control in paragraph 606-10-25-30, Entity A concludes the following:
  1. a
    It has the present right to payment.
  2. b
    Entity B has legal title to the land.
  3. c
    It does not have physical possession of the asset because it cannot restrict or prevent other entities from accessing the land.
  4. d
    Entity B has the significant risks and rewards of ownership.
  5. e
    There is no acceptance clause (assumption).
","snippet":"As described in paragraphs 610-20-25-2 through 25-7, Entity A first considers the guidance in Topic 810 and concludes that it no longer has a controlling financial interest in Entity B or in Entity X (the buyer). Entity …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3436411bed4244188a68e8dd74f37726d3c7ce8dad46e6be5c14b776c5b2ec02","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-14","para":"55-14","html":"
Entity A derecognizes the land and calculates the gain or loss as the difference between the amount of consideration measured in accordance with the guidance in paragraphs 610-20-32-2 and 610-20-32-6 and the carrying amount of the land. The amount of the consideration is $10 million, which includes $6 million in cash plus $4 million for the fair value of the noncontrolling interest in Entity B. Entity A recognizes a gain of $5 million ($10 million consideration ‒ $5 million carrying amount of the assets) and presents the gain in the income statement in accordance with the guidance in paragraph 360-10-45-5. In accordance with the guidance in paragraph 610-20-32-4, Entity A records the noncontrolling interest in Entity B at $4 million and subsequently accounts for that interest in accordance with other Topics.
","snippet":"Entity A derecognizes the land and calculates the gain or loss as the difference between the amount of consideration measured in accordance with the guidance in paragraphs 610-20-32-2 and 610-20-32-6 and the carrying amo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9dada8b2e4404ee314252e03b5ce8eff2282c3108a5d9d0e7e74dc360f54922d","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-15","para":"55-15","html":"
Assume the same facts as in Case A, except that Entity A has the right but not the obligation to repurchase the 60 percent ownership interest in Entity B that it transferred to Entity X (that is, Entity A has a call option). The call option gives Entity A the right to repurchase the 60 percent ownership interest in 2 years for $7 million.
","snippet":"Assume the same facts as in Case A, except that Entity A has the right but not the obligation to repurchase the 60 percent ownership interest in Entity B that it transferred to Entity X (that is, Entity A has a call opti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cc21a1188bac38c025287f7c7d6d0e489ee5f3079b1fe0dd36472c7dc30335fe","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-16","para":"55-16","html":"
Entity A concludes that although the call option represents a variable interest in Entity B, it does not have a controlling financial interest in Entity B in accordance with the guidance in Topic 810. However, when evaluating whether control of the land has been transferred in accordance with the guidance in paragraph 606-10-25-30, Entity A considers the guidance on repurchase features in paragraphs 606-10-25-30(c) and 606-10-55-68 and concludes that it does not transfer control of the land. In addition, because the exercise price on the call option is an amount that is greater than the original selling price, the transaction is considered a financing agreement in accordance with the guidance in paragraph 606-10-55-68(b). Entity A does not derecognize the land and records a financial liability of $6 million in accordance with the guidance in paragraph 606-10-55-70. Entity A does not recognize an investment for its retained 40 percent ownership interest until it derecognizes the land.
","snippet":"Entity A concludes that although the call option represents a variable interest in Entity B, it does not have a controlling financial interest in Entity B in accordance with the guidance in Topic 810. However, when evalu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8a15e6d0a00aad4942d24eba027343ed7a123d2e8adcd403970a4c8ed560e13c","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-17","para":"55-17","html":"
An entity sells (that is, does not out license) the rights to in-process research and development that it recently acquired in a business combination and measured at fair value of $50 million in accordance with Topic 805 on business combinations. The entity concludes that the transferred in-process research and development is not a business. The buyer of the in-process research and development agrees to pay a nonrefundable amount of $5 million at inception plus 2 percent of sales of any products derived from the in-process research and development over the next 20 years. The entity concludes that the sale of in-process research and development is not a good or service that is an output of the entity's ordinary activities.
","snippet":"An entity sells (that is, does not out license) the rights to in-process research and development that it recently acquired in a business combination and measured at fair value of $50 million in accordance with Topic 805…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8f930314d7d80e2548d996e01d646f8497d33f3472a3f4cc0968f281dd5c9edf","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-18","para":"55-18","html":"
Topic 350 on goodwill and other intangibles requires the entity to apply the guidance in this Subtopic to determine the amount and timing of income to be recognized. Therefore, the entity applies the derecognition guidance in this Subtopic as follows:
  1. a
    The entity concludes that it does not have a controlling financial interest in the buyer.
  2. b
    The entity concludes that the contract meets the criteria in paragraph 606-10-25-1.
  3. c
    The entity also concludes that on the basis of the guidance in paragraph 606-10-25-30, it has transferred control of the in-process research and development asset to the buyer. This is because the buyer can use the in-process research and development's records, patents, and supporting documentation to develop potential products and the entity has relinquished all substantive rights to the in-process research and development asset.
  4. d
    In estimating the consideration received, the entity applies the guidance in Topic 606 on determining the transaction price, including estimating and constraining variable consideration. The entity estimates that the amount of consideration that it will receive from the sales-based royalty is $100 million over the 20-year royalty period. However, the entity cannot assert that it is probable that recognizing all of the estimated variable consideration in other income would not result in a significant reversal of that consideration. The entity reaches this conclusion on the basis of its assessment of factors in paragraph 606-10-32-12. In particular, the entity is aware that the variable consideration is highly susceptible to the actions and judgments of third parties, because it is based on the buyer completing the in-process research and development asset, obtaining regulatory approval for the output of the in-process research and development asset, and marketing and selling the output. For the same reasons, the entity also concludes that it could not include any amount, even a minimum amount, in the estimate of the consideration. Consequently, the entity concludes that the estimate of the consideration to be used in the calculation of the gain or loss upon the derecognition of the in-process research and development asset is limited to the $5 million fixed upfront payment.
","snippet":"Topic 350 on goodwill and other intangibles requires the entity to apply the guidance in this Subtopic to determine the amount and timing of income to be recognized. Therefore, the entity applies the derecognition guidan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ff9b8602c5b95c6a30ee58e1e913cf7e6509766665e2daa910bf3e71cef39b2f","downloaded_from":"2026-09-10T00:55:14.020Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479698","source_sha256":"3e048ed68b89cc031f45c038b35fd007601a3b30734d9dcd037878432661724f"}},{"citation":"610-20-55-19","para":"55-19","html":"
At inception of the contract, the entity recognizes a net loss of $45 million ($5 million of consideration, less the in-process research and development asset of $50 million). The entity reassesses the transaction price at each reporting period to determine whether it is probable that a significant reversal would not occur from recognizing the estimate as other income and, if so, recognizes that amount as other income in accordance with paragraphs 606-10-32-14 and
606-10-32-42 through 32-45
.
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