{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/810/10/#40-derecognition","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"810","topic_title":"Consolidation","subtopic":"810-10","subtopic_title":"Overall","section":{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":"Redemption of Subsidiary's Redeemable Stock","paragraphs":[{"citation":"810-10-40-1","para":"40-1","html":"
Accounting for the purchase (early extinguishment) of a wholly owned subsidiary's mandatorily redeemable preferred stock, including stock that contains a redemption feature but is not considered a mandatorily redeemable financial instrument under Topic 480, differs dependent on whether the preferred stock is required under Topic 480 to be accounted for as a liability.
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Section 480-10-25 does not require mandatorily redeemable preferred stock to be accounted for as a liability under certain conditions. If such conditions apply and the mandatorily redeemable preferred stock is not accounted for as a liability, then the entity's acquisition of a subsidiary's mandatorily redeemable preferred stock shall be accounted for as a capital stock transaction. Accordingly, the consolidated entity would not recognize in its income statement any gain or loss from the acquisition of the subsidiary's preferred stock. In the consolidated financial statements, the dividends on a subsidiary's preferred stock, whether mandatorily redeemable or not, would be included in noncontrolling interest as a charge against income.
","snippet":"Section 480-10-25 does not require mandatorily redeemable preferred stock to be accounted for as a liability under certain conditions. If such conditions apply and the mandatorily redeemable preferred stock is not accoun…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a156b5461a633c0e5d8e4eb911bd49e1beca5c37db0a6d86005bbe98debeb741","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},{"citation":"810-10-40-2A","para":"40-2A","html":"
Section 480-10-25 requires mandatorily redeemable preferred stock to be accounted for as a liability under certain conditions. If mandatorily redeemable preferred stock is accounted for as a liability, then any amounts paid or to be paid to holders of those contracts in excess of the initial measurement amount are reflected as interest cost and not as noncontrolling interest charge. Topic 860 specifies whether a liability has been extinguished and Subtopic 470-50 requires that the parent recognize a gain or loss upon extinguishment of the subsidiary's liability for mandatorily redeemable preferred shares for any difference between the carrying amount and the redemption amount.
","snippet":"Section 480-10-25 requires mandatorily redeemable preferred stock to be accounted for as a liability under certain conditions. If mandatorily redeemable preferred stock is accounted for as a liability, then any amounts p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ce6ba6befa6c746f6197d5cc4a7af7ccde7534721838dbeafb78c5f7d43ac8e1","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},{"citation":"810-10-40-3","para":"40-3","html":"
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The deconsolidation and derecognition guidance in this Section applies to the following:
  1. a
    A subsidiary that is a nonprofit activity or a business, except for either of the following:
    1. 1
      Subparagraph superseded by Accounting Standards Update No. 2017-05.
    2. 2
      A conveyance of oil and gas mineral rights (for guidance on conveyances of oil and gas mineral rights and related transactions, see Subtopic 932-360)
    3. 3
      A transfer of a good or service in a contract with a customer within the scope of Topic 606.
  2. b
    A group of assets that is a nonprofit activity or a business, except for either of the following:
    1. 1
      Subparagraph superseded by Accounting Standards Update No. 2017-05.
    2. 2
      A conveyance of oil and gas mineral rights (for guidance on conveyances of oil and gas mineral rights and related transactions, see Subtopic 932-360)
    3. 3
      A transfer of a good or service in a contract with a customer within the scope of Topic 606.
  3. c
    A subsidiary that is not a nonprofit activity or a business if the substance of the transaction is not addressed directly by guidance in other Topics that include, but are not limited to, all of the following:
    1. 1
      Topic 606 on revenue from contracts with customers
    2. 2
      Topic 845 on exchanges of nonmonetary assets
    3. 3
      Topic 860 on transferring and servicing financial assets
    4. 4
      Topic 932 on conveyances of mineral rights and related transactions
    5. 5
      Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets.
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Paragraph superseded by Accounting Standards Update No. 2017-05.
","snippet":"Paragraph superseded by Accounting Standards Update No. 2017-05.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f3fed0e0b6d573f61564db700578841921dfb3291c3f7f3b8e41dc9b6f14c4f","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},{"citation":"810-10-40-4","para":"40-4","html":"
A parent shall deconsolidate a subsidiary or derecognize a group of assets specified in paragraph 810-10-40-3A as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of assets. See paragraph 810-10-55-4A for related implementation guidance.
","snippet":"A parent shall deconsolidate a subsidiary or derecognize a group of assets specified in paragraph 810-10-40-3A as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of asse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f9a5cc129acac5844ced250e35227dc3e7d1b04271ab776af640357e6c18db5c","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},{"citation":"810-10-40-4A","para":"40-4A","html":"
When a parent deconsolidates a subsidiary or derecognizes a group of assets within the scope of paragraph 810-10-40-3A, the parent relationship ceases to exist. The parent no longer controls the subsidiary's assets and liabilities or the group of assets. The parent therefore shall derecognize the assets, liabilities, and equity components related to that subsidiary or group of assets. The equity components will include any noncontrolling interest as well as amounts previously recognized in accumulated other comprehensive income. If the subsidiary or group of assets being deconsolidated or derecognized is a foreign entity (or represents the complete or substantially complete liquidation of the foreign entity in which it resides), then the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that foreign entity. For guidance on derecognizing foreign currency translation adjustments recorded in accumulated other comprehensive income, see Section 830-30-40.
","snippet":"When a parent deconsolidates a subsidiary or derecognizes a group of assets within the scope of paragraph 810-10-40-3A, the parent relationship ceases to exist. The parent no longer controls the subsidiary's assets and l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:024c1eb806681f5454eb8fdb792b13288eac177ea77c8bebf371dfb9b664e082","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},{"citation":"810-10-40-5","para":"40-5","html":"
If a parent deconsolidates a subsidiary or derecognizes a group of assets through a nonreciprocal transfer to owners, such as a spinoff, the accounting guidance in Subtopic 845-10 applies. Otherwise, a parent shall account for the deconsolidation of a subsidiary or derecognition of a group of assets specified in paragraph 810-10-40-3A by recognizing a gain or loss in net income attributable to the parent, measured as the difference between:
  1. a
    The aggregate of all of the following:
    1. 1
      The fair value of any consideration received
    2. 2
      The fair value of any retained noncontrolling investment in the former subsidiary or group of assets at the date the subsidiary is deconsolidated or the group of assets is derecognized
    3. 3
      The carrying amount of any noncontrolling interest in the former subsidiary (including any accumulated other comprehensive income attributable to the noncontrolling interest) at the date the subsidiary is deconsolidated.
  2. b
    The carrying amount of the former subsidiary's assets and liabilities or the carrying amount of the group of assets.
","snippet":"If a parent deconsolidates a subsidiary or derecognizes a group of assets through a nonreciprocal transfer to owners, such as a spinoff, the accounting guidance in Subtopic 845-10 applies. Otherwise, a parent shall accou…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d235ea63d2db2388d3d01f0bf30538b1269b8fd8de5339fcf469d35930045c89","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},{"citation":"810-10-40-6","para":"40-6","html":"
A parent may cease to have a controlling financial interest in a subsidiary through two or more arrangements (transactions). Circumstances sometimes indicate that the multiple arrangements should be accounted for as a single transaction. In determining whether to account for the arrangements as a single transaction, a parent shall consider all of the terms and conditions of the arrangements and their economic effects. Any of the following may indicate that the parent should account for the multiple arrangements as a single transaction:
  1. aThey are entered into at the same time or in contemplation of one another.
  2. bThey form a single transaction designed to achieve an overall commercial effect.
  3. cThe occurrence of one arrangement is dependent on the occurrence of at least one other arrangement.
  4. dOne arrangement considered on its own is not economically justified, but they are economically justified when considered together. An example is when one disposal is priced below market, compensated for by a subsequent disposal priced above market.
","snippet":"A parent may cease to have a controlling financial interest in a subsidiary through two or more arrangements (transactions). Circumstances sometimes indicate that the multiple arrangements should be accounted for as a si…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4145fdbade3eea26278b581fec62a1cbbb718e2015ad16c86df3e09e9fe0de6f","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:646fec153736e9c8c4780b5e37532717d03df21ad52b595e185a9bec2e94b5d6","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a79008469bb6e2faea30e3097f569bc0943fafb5c308b4debe98bbeea7017769","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a79008469bb6e2faea30e3097f569bc0943fafb5c308b4debe98bbeea7017769","downloaded_from":"2026-09-10T01:29:02.168Z","last_downloaded_at":"2026-09-10T01:29:02.168Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481261","source_sha256":"bb2793ab73eb3ec75ca933be611e8e651fc566facd6798e3b4562a1df0ef69aa"}}