# ASC 842-30-40: Leases — Lessor — 40 Derecognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/842/30/#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): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:90b84d1ec383120a1e6abc593d0bd050c2f711ffe35229ad7ca8d1322f8eb7e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/842/30/#40-derecognition) SEC content: no #### Sales-Type and Direct Financing Leases ##### [842-30-40-1](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:9201e60ff843034e0bbc9710374955d699c42006233540a8c99ddf3a2f9f93d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the [commencement date](https://asc.understandingaccounting.org/glossary/c/#commencement-date-of-the-lease-commencement-date "The date on which a lessor makes an underlying asset available for use by a lessee. See paragraphs 842-10-55-19842-10-55-20842-10-55-21 for implementation guidance on the commencement date."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall derecognize the carrying amount of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") (if previously recognized) unless the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") is a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") and collectibility of the [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") is not [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") (see paragraph [842-30-25-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-25-3)). ##### [842-30-40-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:9fe379c8a5de3b1a7aa3f66e441e0a8a5859eaea4c160b1ad41d009021c5cbd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [sales-type lease](https://asc.understandingaccounting.org/glossary/s/#sales-type-lease "From the perspective of a lessor, a lease that meets one or more of the criteria in paragraph 842-10-25-2 and is not an operating lease in accordance with paragraph 842-10-25-3A.") or a [direct financing lease](https://asc.understandingaccounting.org/glossary/d/#direct-financing-lease "From the perspective of a lessor, a lease that meets none of the criteria in paragraph 842-10-25-2 but meets the criteria in paragraph 842-10-25-3(b)and is not an operating lease in accordance with paragraph 842-10-25-3A.") is terminated before the end of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor."), a [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall do all of the following: 1. a Measure the [net investment in the lease](https://asc.understandingaccounting.org/glossary/n/#net-investment-in-the-lease "For a sales-type lease, the sum of the lease receivable and the unguaranteed residual asset. For a direct financing lease, the sum of the lease receivable and the unguaranteed residual asset, net of any deferred selling profit.") for credit losses in accordance with Subtopic 326-20 on financial instruments measured at amortized cost and record any credit loss identified 2. b Reclassify the net investment in the lease to the appropriate category of asset in accordance with other Topics, measured at the sum of the carrying amounts of the [lease receivable](https://asc.understandingaccounting.org/glossary/l/#lease-receivable "A lessor's right to receive lease payments arising from a sales-type lease or a direct financing lease plus any amount that a lessor expects to derive from the underlying asset following the end of the lease term to the extent that it is guaranteed by the lessee or any other third party unrelated to the lessor, measured on a discounted basis.") (less any amounts still expected to be received by the lessor) and the residual asset 3. c Account for the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") that was the subject of the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") in accordance with other Topics. ##### [842-30-40-3](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:7bac69d76a58563924ff714d932b82c61272d960bf92681756b97291f4380946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the original [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") agreement is replaced by a new agreement with a new [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration."), the [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall account for the termination of the original lease as provided in paragraph [842-30-40-2](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-2) and shall classify and account for the new lease as a separate transaction. ##### [842-30-40-4](https://asc.understandingaccounting.org/asc/842/30/#842-30-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:57:23.301Z to 2026-09-10T01:57:23.301Z Record version: sha256:f67db80ef1135fd02adaef51905d1ce7ee2bf2db880c236bd326bb4a1d8b6636 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the acquisition of the residual value of an [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") by a third party, see paragraph [360-10-25-2](https://asc.understandingaccounting.org/asc/360/10/#360-10-25-2).