derecognition of nonfinancial assets

ASC 350-10 is the Overall subtopic that sets the scope and structure for the Intangibles—Goodwill and Other Topic. It governs the subsequent measurement, presentation, and disclosure of goodwill and other intangible assets (through Subtopics 350-20, 350-30, 350-40, 350-50, and 350-60), but expressly excludes accounting at acquisition for goodwill and intangibles acquired in a business combination, an NFP acquisition, or recognized by a joint venture upon formation. It also directs that derecognition of nonfinancial assets within the Topic follow Subtopic 610-20 or Topic 606, as applicable.

ASC 360-20 formerly contained the specialized U.S. GAAP for recognizing profit on sales of real estate (the old FASB Statement No. 66 model with full accrual, installment, cost recovery, deposit, and percentage-of-completion methods, plus sale-leaseback and continuing-involvement rules). Every paragraph in the subtopic has been superseded — mostly by ASU 2014-09 (Revenue from Contracts with Customers) and ASU 2016-02 (Leases). Sales of real estate are now accounted for under ASC 606 if the counterparty is a customer, or under ASC 610-20 for sales of nonfinancial assets to noncustomers, with sale-leaseback transactions governed by ASC 842-40.

ASC 605-974 formerly provided industry-specific revenue recognition guidance for real estate investment trusts under the legacy ASC 605 revenue model. Every paragraph in the subtopic (Sections 05, 15, 25, 45, and 50) was superseded by ASU 2014-09, the revenue standard. REIT revenue transactions are now accounted for under ASC 606 (contracts with customers) or, for rental income, under the leases guidance in ASC 842.

ASC 610-10 is the Overall subtopic of the Other Income Topic, which covers income that is not revenue from a contract with a customer under Topic 606 and is not addressed by other Topics (such as Topic 842 on leases or Topic 944 on insurance) or other revenue/income recognition guidance. It is largely a scope-setting subtopic: it establishes the pervasive scope for Topic 610 and identifies its Subtopics — Overall (610-10), Gains and Losses from the Derecognition of Nonfinancial Assets (610-20), and Gains and Losses on Involuntary Conversions (610-30). The guidance applies to all entities.

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).

ASC 610-30 governs the accounting when a nonmonetary asset (property, equipment, inventory) is involuntarily converted into monetary assets — e.g., insurance proceeds from destruction or theft, or condemnation awards in eminent domain. Because the conversion is a monetary transaction rather than a nonmonetary exchange, any difference between the asset's cost (or carrying amount) and the monetary assets received is a realized gain or loss that must be recognized, even if the proceeds are reinvested or the entity is obligated to reinvest them in replacement assets (610-30-25-2; 610-30-25-3).