{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/40/#25-recognition","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":"842","topic_title":"Leases","subtopic":"842-40","subtopic_title":"Sale and Leaseback Transactions","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Determining Whether the Transfer of the Asset Is a Sale","paragraphs":[{"citation":"842-40-25-1","para":"25-1","html":"
An entity shall apply the following requirements in Topic 606 on revenue from contracts with customers when determining whether the transfer of an asset shall be accounted for as a sale of the asset:
Paragraph 606-10-25-30 on when an entity satisfies a performance obligation by transferring control of an asset.
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The existence of a leaseback (that is, a seller-lessee's right to use the underlying asset for a period of time) does not, in isolation, prevent the buyer-lessor from obtaining control of the asset. However, the buyer-lessor is not considered to have obtained control of the asset in accordance with the guidance on when an entity satisfies a performance obligation by transferring control of an asset in Topic 606 if the leaseback would be classified as a finance lease or a sales-type lease.
","snippet":"The existence of a leaseback (that is, a seller-lessee's right to use the underlying asset for a period of time) does not, in isolation, prevent the buyer-lessor from obtaining control of the asset. However, the buyer-le…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:213efa2b2e6902f668c167a4e89ebb16d99d0c48bc853c6cc567eccccf1c2eb2","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"citation":"842-40-25-3","para":"25-3","html":"
An option for the seller-lessee to repurchase the asset would preclude accounting for the transfer of the asset as a sale of the asset unless both of the following criteria are met:
a
The exercise price of the option is the fair value of the asset at the time the option is exercised.
b
There are alternative assets, substantially the same as the transferred asset, readily available in the marketplace.
","snippet":"An option for the seller-lessee to repurchase the asset would preclude accounting for the transfer of the asset as a sale of the asset unless both of the following criteria are met:\n(a) The exercise price of the option i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:820ab1f74b3ff390ff24bb031781a77ca675b7f1bbef7f499940329a78b28ecc","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c643aae35afd7afcb8a75310510194065d0efccf15d297296b8cb564df6d0707","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"block":null,"heading":"Transfer of the Asset Is a Sale","paragraphs":[{"citation":"842-40-25-4","para":"25-4","html":"
If the transfer of the asset is a sale in accordance with paragraphs
Recognize the transaction price for the sale at the point in time the buyer-lessor obtains control of the asset in accordance with paragraph 606-10-25-30 in accordance with the guidance on determining the transaction price in paragraphs
Account for the lease in accordance with Subtopic 842-20.
b
The buyer-lessor shall account for the purchase in accordance with other Topics and for the lease in accordance with Subtopic 842-30.
","snippet":"If the transfer of the asset is a sale in accordance with paragraphs 842-40-25-1 through 25-3, both of the following apply:\n(a) The seller-lessee shall:\n(1) Recognize the transaction price for the sale at the point in ti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5ff1f76476623a56dd2ca619b5817f0ff4fcf32791e60ed42fa34faacad9235","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f05d934aaf86a5fb3a0d5d0ca1ff8529e7dea3b6e2a9b19909666d00d628ee0b","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"block":null,"heading":"Transfer of the Asset Is Not a Sale","paragraphs":[{"citation":"842-40-25-5","para":"25-5","html":"
If the transfer of the asset is not a sale in accordance with paragraphs
The seller-lessee shall not derecognize the transferred asset and shall account for any amounts received as a financial liability in accordance with other Topics.
b
The buyer-lessor shall not recognize the transferred asset and shall account for the amounts paid as a receivable in accordance with other Topics.
","snippet":"If the transfer of the asset is not a sale in accordance with paragraphs 842-40-25-1 through 25-3, both of the following apply:\n(a) The seller-lessee shall not derecognize the transferred asset and shall account for any …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6278c5de82b0106f1231e3f41fb8b736ddb3d87cf72cc122ee7eec21760600db","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56e816e87020d2722d445dd9bfe412f7c576517f3757eaaeb18a0e1aeee68772","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c746684d649f1cf0ab25dc22b481823e36808cc54df9c5ed4eb9a1386b0ffa61","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c746684d649f1cf0ab25dc22b481823e36808cc54df9c5ed4eb9a1386b0ffa61","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}