FAR, Financial Accounting and Reporting
Sources for Transfers of Nonfinancial Assets to Noncustomers
Last reviewed
The standards and authorities behind PocketCPA's FAR lessons on Transfers of Nonfinancial Assets to Noncustomers. The topic rests on ASC 610.
About this topic
ASC 606 has a boundary, and ASC 610 is what sits on the other side of it.
ASC 606 governs the transfer of goods or services that are an output of the entity's ordinary activities to a customer. A software company selling software is inside it. That same software company selling the office building it no longer needs is not: the building is not its output and the buyer is not its customer.
Key points
- ASC 610-20 applies to transfers of nonfinancial assets to noncustomers, such as real estate sales outside the ordinary course.
- The transfer is derecognized when the buyer obtains control, applying the ASC 606 control-transfer criteria.
- Gain or loss equals the consideration received minus the carrying amount of the asset transferred.
- A retained controlling financial interest prevents derecognition.
What the lessons cover
- Scope: the mirror of ASC 606 (ASC 610-20-15-2)
- Gain, not revenue (ASC 610-20-25-1)
- Measuring consideration: the 606 transaction price (ASC 610-20-32-3)
- Liabilities relieved count as consideration (ASC 610-20-32-5)
- Contracts partially within scope (ASC 610-20-15-9)
- In-substance nonfinancial assets held in a subsidiary (ASC 610-20-55-14)
- When ASC 810 says control transferred and ASC 606 says it did not (ASC 610-20-55-16)
- Involuntary conversions (ASC 610-30-25-3)
Authoritative references
Where these requirements sit in the literature.
- ASC 610-20-15-2, the scope of transfers of nonfinancial assets to noncustomers, incorporating the ASC 606 contract, control and measurement paragraphs.
- ASC 610-20-15-9, contracts partially within the Topic.
- ASC 610-20-32-3, consideration measured as the ASC 606 transaction price.
- ASC 610-20-32-5, inclusion of the carrying amount of liabilities relieved.
- ASC 610-20-25-1, recognition of a gain or loss on a transfer within scope, by applying Topic 810 and then Topic 606 as described in 610-20-25-2 through 25-7.
- ASC 610-20-25-2, the Topic 810 controlling-financial-interest gate, applied first.
- ASC 610-20-25-3, the bar on derecognition while that controlling financial interest is retained.
- ASC 610-20-25-5, the ASC 606 contract criteria.
- ASC 610-20-25-6, derecognition of each distinct asset on transfer of control under ASC 606-10-25-30.
- ASC 610-20-40-1 and 610-20-40-2 were superseded by ASU 2017-05 (change table 610-20-00-1, 02/22/2017) and are not cited here; the guidance they carried now sits in 610-20-25-1 through 25-7.
- ASC 610-20-55-14, full gain recognition on losing control of an in-substance nonfinancial asset with a retained noncontrolling interest.
- ASC 610-20-55-15 through 55-16, the case where ASC 810 control transfers and ASC 606 control does not.
- ASC 610-30-25-3, involuntary conversions of nonmonetary assets to monetary assets.
- Three other Topics supply the machinery this one borrows.
- ASC 606 supplies the control and transaction-price mechanics.
- ASC 810 supplies the deconsolidation conclusion.
- ASC 860 supplies the derecognition of financial assets.
How PocketCPA uses these sources
Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.