# ASC 810-10-40: Consolidation — Overall — 40 Derecognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/810/10/#40-derecognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:a79008469bb6e2faea30e3097f569bc0943fafb5c308b4debe98bbeea7017769 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-10-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/810/10/#40-derecognition) SEC content: no #### Redemption of Subsidiary's Redeemable Stock ##### [810-10-40-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:e0587b301bb0e6288691ebae0b9c759dee9a8f7e02fb23bfe43fc27e25048bdb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accounting for the purchase (early extinguishment) of a wholly owned [subsidiary's](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.)") 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. ##### [810-10-40-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:a156b5461a633c0e5d8e4eb911bd49e1beca5c37db0a6d86005bbe98debeb741 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity."), the dividends on a subsidiary's preferred stock, whether mandatorily redeemable or not, would be included in noncontrolling interest as a charge against income. ##### [810-10-40-2A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-2A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:ce6ba6befa6c746f6197d5cc4a7af7ccde7534721838dbeafb78c5f7d43ac8e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](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.") charge. Topic 860 specifies whether a liability has been extinguished and Subtopic 470-50 requires that the [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.)") 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. ##### [810-10-40-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:68fa36a62ca4c460ca9d4bb29a56132e8af815a7c000c7674ba0d43cd07e28b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Deconsolidation of a Subsidiary or Derecognition of a Group of Assets ##### [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:3bd97bf1d157c0f12d4d38fca0c484ab1dbe74b031c9aa0fbe602d3cefd8ece8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The deconsolidation and derecognition guidance in this Section applies to the following: 1. a A subsidiary that is a [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.") or a business, except for either of the following: 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-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](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.") 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](https://asc.understandingaccounting.org/updates/asu-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](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. 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. ##### [810-10-40-3B](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-3B) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:4f3fed0e0b6d573f61564db700578841921dfb3291c3f7f3b8e41dc9b6f14c4f 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/). ##### [810-10-40-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:f9a5cc129acac5844ced250e35227dc3e7d1b04271ab776af640357e6c18db5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A parent shall deconsolidate a subsidiary or derecognize a group of assets specified in paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#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](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4A) for related implementation guidance. ##### [810-10-40-4A](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-4A) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:024c1eb806681f5454eb8fdb792b13288eac177ea77c8bebf371dfb9b664e082 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a parent deconsolidates a subsidiary or derecognizes a group of assets within the scope of paragraph [810-10-40-3A](https://asc.understandingaccounting.org/asc/810/10/#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](https://asc.understandingaccounting.org/glossary/f/#foreign-entity "An operation (for example, subsidiary, division, branch, joint venture, and so forth) whose financial statements are both: Prepared in a currency other than the reporting currency of the reporting entity Combined or consolidated with or accounted for on the equity basis in the financial statements of the reporting 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. ##### [810-10-40-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:d235ea63d2db2388d3d01f0bf30538b1269b8fd8de5339fcf469d35930045c89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a parent deconsolidates a subsidiary or derecognizes a group of assets through a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "Nonreciprocal transfer is a transfer of assets or services in one direction, either from an entity to its owners (whether or not in exchange for their ownership interests) or to another entity, or from owners or another entity to the entity. An entity's reacquisition of its outstanding stock is an example of a nonreciprocal transfer.") to [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities."), 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](https://asc.understandingaccounting.org/asc/810/10/#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. ##### [810-10-40-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-40-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:29:02.168Z to 2026-09-10T01:29:02.168Z Record version: sha256:4145fdbade3eea26278b581fec62a1cbbb718e2015ad16c86df3e09e9fe0de6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.