# ASC 610-20: Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/610/20/) 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): 2026-09-10T00:54:49.448Z to 2026-09-10T00:55:14.020Z Record version: sha256:dedab041db2f9cf8c35e072bb86cbdbb12945120711086c66dfab35fe55ce234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20: Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets ### Machine-generated study aids ```json { "summary": "ASC 610-20 governs how an entity recognizes and measures gains or losses when it derecognizes nonfinancial assets (and \"in substance nonfinancial assets\") transferred to counterparties who are not customers — for example, sales of real estate, intangibles, IPR&D, or ownership interests in a non-business subsidiary holding only such assets. The entity first applies Topic 810 to determine whether it retains a controlling financial interest, then applies Topic 606's contract-existence, distinct-asset, and transfer-of-control criteria to decide when to derecognize each distinct asset, and computes gain or loss as the difference between consideration (transaction price plus the carrying amount of liabilities assumed or relieved) and the asset's carrying amount (610-20-25-1 through 25-7; 610-20-32-2).", "key_points": [ "The Subtopic applies to derecognition of nonfinancial assets (intangibles, land, buildings, materials and supplies, possibly with zero carrying value) and in substance nonfinancial assets transferred to noncustomers, and to transfers of ownership interests in a consolidated subsidiary that is not a business only if all of the subsidiary's assets are nonfinancial or in substance nonfinancial assets (610-20-15-2; 610-20-15-3).", "A financial asset promised in a contract is an 'in substance nonfinancial asset' if substantially all of the fair value of the assets promised to the counterparty is concentrated in nonfinancial assets; cash and cash equivalents are excluded from the test and assumed liabilities do not affect it (610-20-15-5; 610-20-15-7), and the test is reapplied subsidiary-by-subsidiary if the contract-level test fails (610-20-15-6).", "Scope exclusions include contracts with customers (Topic 606), transfers of a business or nonprofit activity (810-10-40), sale-leasebacks (842-40), Topic 860 transfers, nonmonetary transactions (Topic 845), leases (Topic 842), and transfers solely between entities under common control (610-20-15-4).", "Derecognition sequence: apply Topic 810 first — if a controlling financial interest is retained, do not derecognize and apply 810-10-45-21A through 45-24 (610-20-25-2; 610-20-25-3); if not, test the Topic 606 contract criteria in 606-10-25-1 (if unmet, apply 350-10-40-3 or 360-10-40-3C) and derecognize each distinct asset when control transfers under 606-10-25-30 (610-20-25-5; 610-20-25-6).", "Gain or loss equals consideration allocated to the distinct asset less its carrying amount, where consideration includes the transaction price (determined under 606-10-32-2 through 32-27, including variable consideration and the constraint) plus the carrying amount of liabilities assumed or relieved by the counterparty (610-20-32-2; 610-20-32-3; 610-20-32-5).", "A noncontrolling interest received from the counterparty or retained in a former subsidiary is treated as noncash consideration measured under 606-10-32-21 through 32-24 (610-20-32-4).", "If a liability assumed by the counterparty is extinguished under 405-20-40-1 before control of the asset transfers, the liability is derecognized with no gain or loss and a contract liability is recorded; if control transfers first, a contract asset is recognized to the extent the liability's carrying amount is in the gain or loss calculation (610-20-45-3)." ], "categories": [ "Derecognition", "Revenue", "Consolidation", "Recognition" ], "audience_level": "advanced", "student_note": "This is the \"sale of real estate / IPR&D / other assets to a non-customer\" rulebook created by ASU 2017-05, and exams love the partial-in-scope fact pattern where a contract splits between 610-20 and other Topics under 606-10-15-4. The most common misunderstanding is thinking financial assets are always outside the Subtopic — if substantially all the fair value promised is in nonfinancial assets, the receivables ride along as in substance nonfinancial assets; also remember a retained noncontrolling interest counts as consideration at fair value, not as a carryover-basis retained investment.", "related_topics": [ "606-10", "810-10", "360-10", "350-10", "845", "405-20" ], "key_concepts": [ "in substance nonfinancial asset", "derecognition of nonfinancial assets", "controlling financial interest", "transfer of control", "distinct asset", "noncash consideration", "retained noncontrolling interest", "constraint on variable consideration" ] } ``` Source downloaded (UTC): 2026-09-10T00:54:49.448Z to 2026-09-10T00:54:49.448Z Record version: sha256:689dec5ac424a76fab8dc014c1df76227962354237275d495becc54bc225d3a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/610/20/#00-status) SEC content: no ##### [610-20-00-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:49.448Z to 2026-09-10T00:54:49.448Z Record version: sha256:49d4a6825719df489ca46ca70b6eebe01c5e5dcc7bf722a41b6bf95ba7c2baa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
BusinessAddedAccounting Standards Update No. 2014-0905/28/2014
CashAddedAccounting Standards Update No. 2017-0502/22/2017
Cash EquivalentsAddedAccounting Standards Update No. 2017-0502/22/2017
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
Contract AssetAddedAccounting Standards Update No. 2017-0502/22/2017
Contract LiabilityAddedAccounting Standards Update No. 2017-0502/22/2017
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Disposal GroupAddedAccounting Standards Update No. 2014-0905/28/2014
In Substance Nonfinancial AssetAddedAccounting Standards Update No. 2017-0502/22/2017
Intangible AssetsAddedAccounting Standards Update No. 2017-0502/22/2017
Joint VentureAddedAccounting Standards Update No. 2017-0502/22/2017
Legal EntityAddedAccounting Standards Update No. 2017-0502/22/2017
Noncontrolling InterestAddedAccounting Standards Update No. 2017-0502/22/2017
Nonprofit ActivityAddedAccounting Standards Update No. 2014-0905/28/2014
ParentAddedAccounting Standards Update No. 2017-0502/22/2017
Performance ObligationAddedAccounting Standards Update No. 2014-0905/28/2014
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
SubsidiaryAddedAccounting Standards Update No. 2017-0502/22/2017
Transaction PriceAddedAccounting Standards Update No. 2014-0905/28/2014
Variable InterestsAddedAccounting Standards Update No. 2017-0502/22/2017
610-20-05-1AmendedAccounting Standards Update No. 2017-0502/22/2017
610-20-05-1AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-05-2AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-15-1 through 15-3
AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-15-2AmendedAccounting Standards Update No. 2017-0502/22/2017
610-20-15-3AmendedAccounting Standards Update No. 2017-0502/22/2017
610-20-15-3AmendedAccounting Standards Update No. 2016-0202/25/2016
610-20-15-3AAddedAccounting Standards Update No. 2025-0709/29/2025
610-20-15-4AmendedMaintenance Update 2021-02 (PDF)01/19/2021
610-20-15-4 through 15-10
AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-25-1AmendedAccounting Standards Update No. 2017-0502/22/2017
610-20-25-1AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-25-2 through 25-7
AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-32-1SupersededAccounting Standards Update No. 2017-0502/22/2017
610-20-32-1AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-32-2 through 32-6
AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-40-1SupersededAccounting Standards Update No. 2017-0502/22/2017
610-20-40-1AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-40-2SupersededAccounting Standards Update No. 2017-0502/22/2017
610-20-40-2AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-45-1AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-45-2AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-45-3AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-50-1AddedAccounting Standards Update No. 2017-0502/22/2017
610-20-55-1 through 55-4
AmendedAccounting Standards Update No. 2017-0502/22/2017
610-20-55-1 through 55-4
AddedAccounting Standards Update No. 2014-0905/28/2014
610-20-55-5 through 55-19
AddedAccounting Standards Update No. 2017-0502/22/2017
Source downloaded (UTC): 2026-09-10T00:54:52.644Z to 2026-09-10T00:54:52.644Z Record version: sha256:a4bf85661bc2aed40b4b3a251de9e835ec2203dc83c06f10723f2d860c223a02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/610/20/#05-overview-and-background) SEC content: no ##### [610-20-05-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:52.644Z to 2026-09-10T00:54:52.644Z Record version: sha256:551bfdf1050b4106994363d94ba5b5c3e83f9aa7b26ea4709d3c65e8882020f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on the recognition of gains and losses on transfers 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.") to counterparties that are not [customers](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."). Although the guidance in this Subtopic applies to [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with noncustomers, it refers to revenue recognition principles in 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. ##### [610-20-05-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:52.644Z to 2026-09-10T00:54:52.644Z Record version: sha256:a207604baddc615a0d8f18fdb2127593620c262a03d80ce04f13b1d376244fda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The term _transfer_ in this Subtopic is used broadly and includes sales and situations in which 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.)") transfers ownership interests (or [variable interests](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.)") or other changes in facts and circumstances that result in the derecognition of nonfinancial assets or in substance nonfinancial assets that do not constitute a business. For example, an entity may lose control of nonfinancial assets or in substance nonfinancial assets because of the expiration or termination of an existing contractual arrangement, a dilution event, a government action, or upon default of a subsidiary's nonrecourse debt. An entity also may lose control of nonfinancial assets or in substance nonfinancial assets by contributing those assets to a [joint venture](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.") or other noncontrolled investee. Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:db9168e3cab60ca0eecdd8d927364595cc896e2baf4a37872559a337cfeddab7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:de84046143dce42398ce2c14bed39ee4d3c18770595da7d4aed732c21a8287b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:a33699ae707fa39bbf7efc78d6725c91aa1a646b242fcc49eee98e8b32de3d1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:4268ea888b3647b7734dce07271434f391287fe377874ff88dbc1d780eb22ccb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: yes Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:5c13ec3906a7e1c8f3120c9fccaca752d432ea2eb937dfb1c7c24a4030f9a880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:4f88a2620e7a4da3f2345e4b376e5cebbc9e9819eaabc7a3fa64bda4cd21525f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:7c39980726e6e76dcb2acf7b9b52ba4b961599fc2138766fc4b2622e70672b90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:bbd80aa02d9bedc4bee4d50c24c3f812798a7c563cdc90195740bf6dd59ed8ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:58c4bdae579f3e2f062c2bf8313984c2a9a7ee61adad516fdbb8d46231ba8ed4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:3576883414adfa75b12e995c878549a923213fe2929393c87caf75a06e056330 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:43d3afcdfcf3919313103f3b889acc3963484dd54afef7d97f82a5d9324786cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:54:54.566Z to 2026-09-10T00:54:54.566Z Record version: sha256:8a28f42ba9b5ebc023dc613ea8a3ccaa33a1cc64185c8a0129e3119b6c678c65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:167285df104650885610a5c8fa8954bd5c220e4cce2a69fb3b89b85cb10e503a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/610/20/#25-recognition) SEC content: no ##### [610-20-25-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:4a391e0ce07a60626c3d118236f36dc66b2043e13787de9d5debee29c80c1073 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To recognize a gain or loss from the transfer of nonfinancial assets or [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.") within the scope of this Subtopic, an entity shall apply the guidance in Topic 810 on consolidation and in 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](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](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.") as described in paragraphs [610-20-25-2 through 25-7](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-2) . #### Determining Whether an Entity Has a Controlling Financial Interest ##### [610-20-25-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:433886643ed9f1552696116ce10e326d62883480f0665b7050a47a78f9744834 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall first evaluate whether it has (or continues to have) a controlling financial interest in the [legal entity](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.") that holds the nonfinancial assets and/or [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.") by applying the guidance in Topic 810 on consolidation. For example, if 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.)") transfers ownership interests 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.)"), the parent shall evaluate whether it continues to have a controlling financial interest in that subsidiary. Similarly, when an entity transfers assets directly to a counterparty (or a legal entity formed by the counterparty), the entity shall evaluate whether it has a controlling financial interest in the counterparty (or the legal entity formed by the counterparty). ##### [610-20-25-3](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:381d2ee164dd6a06abe862a4dbf36618997bab1cd74e7ca75992dd720dca7b80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity determines it has (or continues to have) a controlling financial interest in the legal entity that holds the nonfinancial assets or in substance nonfinancial assets, it shall not derecognize those assets and shall apply the guidance in paragraphs [810-10-45-21A through 45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-21A) . ##### [610-20-25-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:c7a691bfbbf03a2db80eb1b47f0c5c16405568e6a808e959d55bde40fa52607b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any nonfinancial assets or in substance nonfinancial assets transferred that are held in a legal entity in which the entity does not have (or ceases to have) a controlling financial interest shall be further evaluated in accordance with the guidance in paragraphs [610-20-25-5 through 25-7](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-5) . #### Applying Revenue Recognition Guidance ##### [610-20-25-5](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:104909fec00f53bf3385fb1205ac39afb3d5d64cdd80c54d5d6f1924040d2d5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. After applying the guidance in paragraphs [610-20-25-2 through 25-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-2) , an entity shall next evaluate a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") in accordance with the guidance in paragraphs [606-10-25-1 through 25-8](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1) . If a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") does not meet all of the criteria in paragraph [606-10-25-1](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1), an entity shall not derecognize the nonfinancial assets or [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.") transferred, and it shall apply the guidance in paragraph [350-10-40-3](https://asc.understandingaccounting.org/asc/350/10/#350-10-40-3) to any [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.)") and the guidance in paragraph [360-10-40-3C](https://asc.understandingaccounting.org/asc/360/10/#360-10-40-3C) to any property, plant, and equipment. An entity 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 a contract subsequently meets all of the criteria in paragraph [606-10-25-1](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1). ##### [610-20-25-6](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:773f1d2cf34dd3837aba8036c7c34a7d9375c07af562ad00fdf6402464ac792c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Once a contract meets all of the criteria in paragraph [606-10-25-1](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1), an entity shall identify each distinct nonfinancial asset and distinct in substance nonfinancial asset promised to a counterparty in accordance with the guidance in paragraphs [606-10-25-19 through 25-22](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-19) . An entity shall derecognize each distinct asset when it transfers control of the asset in accordance with paragraph [606-10-25-30](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-30). In some cases, control of each asset may transfer at the same time such that an entity may not need to separate and allocate consideration to each distinct nonfinancial asset and in substance nonfinancial asset. That may be the case, for example, when a parent transfers ownership interests in a consolidated subsidiary that holds nonfinancial assets (or nonfinancial assets and in substance nonfinancial assets) and ceases to have a controlling financial interest in the subsidiary in accordance with Topic 810. However, control of each asset may not transfer at the same time if the parent has control of some of the assets in accordance with paragraph [606-10-25-30](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-30) (for example, through repurchase agreements). ##### [610-20-25-7](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:00.538Z to 2026-09-10T00:55:00.538Z Record version: sha256:43e0594a1c4989ba03f0de79cd044745fe90a46f19129ba8bb9bc478f46e86d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of evaluating the indicators of the transfer of control in paragraph [606-10-25-30](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-30), if an entity has (or continues to have) a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") in the [legal entity](https://asc.understandingaccounting.org/glossary/l/#legal-entity "Any legal structure used to conduct activities or to hold assets. Some examples of such structures are corporations, partnerships, limited liability companies, grantor trusts, and other trusts.") that holds the nonfinancial assets or in substance nonfinancial assets as a result of the transaction, the entity shall evaluate the point in time at which the legal entity holding the assets obtains (or has) control (for example, by evaluating whether the legal entity can direct the use of, and obtain substantially all of the benefits from, each distinct nonfinancial asset or in substance nonfinancial asset within it). (See Case A of Example 2 in paragraphs [610-20-55-11 through 55-14](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-11) .) If the entity does not have a noncontrolling interest in the legal entity that holds the nonfinancial assets or in substance nonfinancial assets as a result of the transaction, it shall evaluate the point in time at which a counterparty (or counterparties, collectively) obtains control of the assets in the legal entity (for example, by evaluating whether a counterparty \[or counterparties, collectively\] can direct the use of, and obtain substantially all of the benefits from, each distinct nonfinancial asset or in substance nonfinancial asset within the legal entity). Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:eb95451d8ad77eb8e63aee00652a3b9ae9da15856337ceccc4ced3b5a1355a3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-32: 32 Measurement [Read section](https://asc.understandingaccounting.org/asc/610/20/#32-measurement) SEC content: no ##### [610-20-32-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:4d82dd19417cf298884398dbe38367a4b397c3adf79480ea8e0744ac25bb4388 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). ##### [610-20-32-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:a64e5d860cbb3acc517c26dea824052239f765e0c1c0065292bcd6bdc5516956 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an entity meets the criteria to derecognize a distinct nonfinancial asset or a distinct [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."), it shall recognize a gain or loss for the difference between the amount of consideration measured and allocated to that distinct asset in accordance with paragraphs [610-20-32-3 through 32-6](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-3) and the carrying amount of the distinct asset. The amount of consideration promised in a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") that is included in the calculation of a gain or loss includes both the [transaction price](https://asc.understandingaccounting.org/glossary/t/#transaction-price "The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.") and the carrying amount of liabilities assumed or relieved by a counterparty. ##### [610-20-32-3](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:8327e3efb96ace78f96e7856f54c3f8f0857a92917873f9c65d180ea86347134 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine the transaction price, an entity shall apply the following paragraphs in 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](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."): 1. a Paragraphs [606-10-32-2 through 32-27](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-2) on determining the transaction price, including all of the following: 1. 1 Estimating variable consideration 2. 2 Constraining estimates of variable consideration 3. 3 The existence of a significant financing component 4. 4 Noncash consideration 5. 5 Consideration payable to a customer. 2. b Paragraphs [606-10-32-42 through 32-45](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-42) on accounting for changes in the transaction price. ##### [610-20-32-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:cfca7024a84e6c74c498b0a09c2fe0a2610f00ac5a1f70d80897222833992564 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset in exchange for a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest."), the entity shall consider the noncontrolling interest received from the counterparty as noncash consideration and shall measure it in accordance with the guidance in paragraphs [606-10-32-21 through 32-24](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-21) . Similarly, if 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.)") transfers control of a distinct nonfinancial asset or in substance nonfinancial asset by transferring ownership interests 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.)") but retains a noncontrolling interest in its former subsidiary, the entity shall consider the noncontrolling interest retained as noncash consideration and shall measure it in accordance with the guidance in paragraphs [606-10-32-21 through 32-24](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-21) . (See Case A of Example 2 in paragraphs [610-20-55-11 through 55-14](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-11) .) ##### [610-20-32-5](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:838ed67e131d918fb4f6ee8d75b3eb1d2822b21f5ba072fe06255aa79af958e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a counterparty promises to assume or relieve a liability of an entity in exchange for a transfer of nonfinancial assets or in substance nonfinancial assets within the scope of this Subtopic, the transferring entity shall include the carrying amount of the liability in the consideration used to calculate the gain or loss. Although a liability assumed or relieved by a counterparty shall be included in the consideration used to calculate a gain or loss, an entity shall not derecognize the liability until it has been extinguished in accordance with the guidance in paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) (see paragraph [610-20-45-3](https://asc.understandingaccounting.org/asc/610/20/#610-20-45-3) on how to present the liability if it is extinguished before or after the entity transfers control of the nonfinancial assets or in substance nonfinancial assets). If an entity transfers control of the nonfinancial assets or in substance nonfinancial assets before a liability is extinguished, it shall apply the guidance on constraining estimates of variable consideration in paragraph [606-10-32-11](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-11) to determine the carrying amount of the liability to be included in the gain or loss calculation. ##### [610-20-32-6](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:03.648Z to 2026-09-10T00:55:03.648Z Record version: sha256:bb8644151f7cf018151db7eea9534aecda49c516693dd92bd3fc47cfd03465d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall allocate the consideration calculated in accordance with the guidance in paragraphs [610-20-32-2 through 32-5](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-2) to each distinct nonfinancial asset or in substance nonfinancial asset by applying the guidance in paragraphs [606-10-32-28 through 32-41](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-28) . Source downloaded (UTC): 2026-09-10T00:55:06.712Z to 2026-09-10T00:55:06.712Z Record version: sha256:a2c81a3901e5c186b3e71e0821c6ac05962fcab281571d2351c86c9cd6001a66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/610/20/#40-derecognition) SEC content: no ##### [610-20-40-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:06.712Z to 2026-09-10T00:55:06.712Z Record version: sha256:b913bfdf089068c311d85c19ba179d20337b6c8b618f98278c1862b076c7eedc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). ##### [610-20-40-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:06.712Z to 2026-09-10T00:55:06.712Z Record version: sha256:478976d1864691e7ea7363e6d6b23a931b837b3fdb642709e218653d1107e3a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). Source downloaded (UTC): 2026-09-10T00:55:09.656Z to 2026-09-10T00:55:09.656Z Record version: sha256:a43f5fb8aaaf8fcad13b560ca2885ce598d47def3571708ec18e21f531547984 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/610/20/#45-other-presentation-matters) SEC content: no ##### [610-20-45-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:09.656Z to 2026-09-10T00:55:09.656Z Record version: sha256:2a4805f2c91edb025c80cac50d617f2cc53bf835da5f9e677ab7cb48be3635be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [360-10-45-5](https://asc.understandingaccounting.org/asc/360/10/#360-10-45-5) for guidance on presentation of a gain or loss recognized on the sale of a long-lived 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.")). ##### [610-20-45-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:09.656Z to 2026-09-10T00:55:09.656Z Record version: sha256:4edd67172ff3fc490a8c748e32521deadbb475b8102b0b1b36eb2c93b7ae38d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When either party to a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") has performed, an entity shall apply the guidance in paragraphs [606-10-45-1 through 45-5](https://asc.understandingaccounting.org/asc/606/10/#606-10-45-1) to present the relationship between the entity's performance and the counterparty's payment. ##### [610-20-45-3](https://asc.understandingaccounting.org/asc/610/20/#610-20-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:09.656Z to 2026-09-10T00:55:09.656Z Record version: sha256:a9e49f41b99ccdf9131724c9fe9f36d4d360774d1e21cd1db642975ad1cfe7ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity meets the criteria in paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#405-20-40-1) to derecognize a liability assumed (or relieved) by a counterparty before transferring control of a distinct nonfinancial asset, the liability shall be derecognized but no gain or loss shall be recognized. Instead, the entity shall record a [contract liability](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer."), which represents consideration received before transferring control of the asset. If an entity transfers control of a distinct nonfinancial asset before meeting the criteria to derecognize a liability assumed by a counterparty, the entity shall recognize a [contract asset](https://asc.understandingaccounting.org/glossary/c/#contract-asset "An entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity's future performance).") to the extent the carrying amount of the liability is included in the calculation of the gain or loss. Source downloaded (UTC): 2026-09-10T00:55:11.268Z to 2026-09-10T00:55:11.268Z Record version: sha256:225594bcb4b41f847f1f40c1049ff4c6ecb03c3186c2861fd31dd279df18a2b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/610/20/#50-disclosure) SEC content: no ##### [610-20-50-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:11.268Z to 2026-09-10T00:55:11.268Z Record version: sha256:7185542a4022fa2a3119365ac778f594664f220c096fbbbef9b9091b305eab62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [360-10-50-3 through 50-3A](https://asc.understandingaccounting.org/asc/360/10/#360-10-50-3) for guidance on disclosure of a gain or loss recognized upon the derecognition of a long-lived 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.")). Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:dde8d022737bd08e97429b880de050cabdc5c3ea2f6bc20db0d475f48ed61b0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 610-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/610/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [610-20-55-1](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:7169dea24d04a72284eeba3f37450f102fcd04dd8d7397c9fb99d813ea450d5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Examples illustrate the guidance in this Subtopic. ##### [610-20-55-2](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:125e2e444632727df724ce157c25ddf50f8ab5e63db9513708161e76410685dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Seller enters into a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") 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. ##### [610-20-55-3](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:10a1b9f43398184ee4f8c6d15a324ab0c037908d5d450b27557f58d83d8be279 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Seller concludes that the assets promised in the contract are 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.") 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](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](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."). 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](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."). 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. ##### [610-20-55-4](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:f0a32b025fb2177482c65a2de3274a8fbcd104eb39a38641a79c0fb589b038cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-15-4) to separate and measure the guarantee as described in paragraph [610-20-15-9](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-9). ##### [610-20-55-5](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:05dfc56201da426c2bb1016fb3ca26ec3b1a9cc44854e3f8a37f3ac9cf8cfef7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Seller's conclusions would be the same if it transferred the real estate, leases, and receivables by transferring ownership interests 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, 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. ##### [610-20-55-6](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:1abaa196512f853d40a31f3eaa2c8863bd6d9cbc7ac67c9900bc189cccf046b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [610-20-55-7](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:89ef66d996037c873be02bfb204fd261ae0ace6223aa031966c916e94b9ba2ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with the guidance in paragraph [610-20-15-9](https://asc.understandingaccounting.org/asc/610/20/#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](https://asc.understandingaccounting.org/asc/606/10/#606-10-15-4) to separate and measure the financial assets. ##### [610-20-55-8](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:de62aebf5477b63b7182fc14b1aa25eb3b5975b80ad02cefe1661a7b0029198d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/610/20/#610-20-15-8), if all of the assets promised to the counterparty in an individual 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.)") 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)](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. ##### [610-20-55-9](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:47a53545465d814565f508ab62c9afdb89de8488058c1ea64d20716ac5e539a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [610-20-55-10](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:8eb96e17db7144b1ec36a4837d0b681d3665abae052dfd5b8a7d874e18f6a456 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/606/10/#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. ##### [610-20-55-11](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:a534acbb8bb46aed51d26686486360d81da8277177ccfde313ef9f2edca3fcbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [610-20-55-12](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:2d18aaea1fa594e05f5bf847d304c94ae61245974f0fe62225325d6b7c3a7fca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [610-20-55-13](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:3436411bed4244188a68e8dd74f37726d3c7ce8dad46e6be5c14b776c5b2ec02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As described in paragraphs [610-20-25-2 through 25-7](https://asc.understandingaccounting.org/asc/610/20/#610-20-25-2) , 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1) and that control of the land has been transferred in accordance with the guidance in paragraph [606-10-25-30](https://asc.understandingaccounting.org/asc/606/10/#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](https://asc.understandingaccounting.org/asc/610/20/#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](https://asc.understandingaccounting.org/asc/606/10/#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). ##### [610-20-55-14](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:9dada8b2e4404ee314252e03b5ce8eff2282c3108a5d9d0e7e74dc360f54922d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/610/20/#610-20-32-2) and [610-20-32-6](https://asc.understandingaccounting.org/asc/610/20/#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](https://asc.understandingaccounting.org/asc/360/10/#360-10-45-5). In accordance with the guidance in paragraph [610-20-32-4](https://asc.understandingaccounting.org/asc/610/20/#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. ##### [610-20-55-15](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:cc21a1188bac38c025287f7c7d6d0e489ee5f3079b1fe0dd36472c7dc30335fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [610-20-55-16](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:8a15e6d0a00aad4942d24eba027343ed7a123d2e8adcd403970a4c8ed560e13c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A concludes that although the call option represents 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 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-30), Entity A considers the guidance on repurchase features in paragraphs [606-10-25-30(c)](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-30) and [606-10-55-68](https://asc.understandingaccounting.org/asc/606/10/#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)](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-68). 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-70). Entity A does not recognize an investment for its retained 40 percent ownership interest until it derecognizes the land. ##### [610-20-55-17](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:8f930314d7d80e2548d996e01d646f8497d33f3472a3f4cc0968f281dd5c9edf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [610-20-55-18](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:ff9b8602c5b95c6a30ee58e1e913cf7e6509766665e2daa910bf3e71cef39b2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-1). 3. c The entity also concludes that on the basis of the guidance in paragraph [606-10-25-30](https://asc.understandingaccounting.org/asc/606/10/#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](https://asc.understandingaccounting.org/glossary/t/#transaction-price "The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties."), 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](https://asc.understandingaccounting.org/asc/606/10/#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. ##### [610-20-55-19](https://asc.understandingaccounting.org/asc/610/20/#610-20-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:55:14.020Z to 2026-09-10T00:55:14.020Z Record version: sha256:908659d0211af12960081c92c5674c394e77d27e7e234b295882071a8f503fef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-14) and [606-10-32-42 through 32-45](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-42) .