Chapter 4 — Subsequent Accounting for Intangible Assets

4.6 Transfer or Sale of Intangible Assets

ASC 350-10

Transfer or Sale of Intangible Assets

40-1 An entity shall account for the derecognition of a nonfinancial asset, including an in substance nonfinancial asset, within the scope of this Topic in accordance with Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, unless a scope exception from Subtopic 610-20 applies. For example, the derecognition of a nonfinancial asset in a contract with a customer shall be accounted for in accordance with Topic 606 on revenue from contracts with customers.

40-2 An entity shall account for the derecognition of a subsidiary or a group of assets that is either a business or nonprofit activity in accordance with the derecognition guidance in Subtopic 810-10.

40-3 If an entity transfers a nonfinancial asset in accordance with paragraph 350-10-40-1, and the contract does not meet all of the criteria in paragraph 606-10-25-1, the entity shall not derecognize the nonfinancial asset and shall follow the guidance in paragraphs 606-10-25-6 through 25-8 to determine if and when the contract subsequently meets all of the criteria in paragraph 606-10-25-1. Until all of the criteria in paragraph 606-10-25-1 are met, the entity shall continue to do any of the following, as applicable:

Report the nonfinancial asset in its financial statements
Recognize amortization expense as a period cost for those assets with a finite life
Apply the impairment guidance in Section 350-30-35
For crypto assets accounted for in accordance with Subtopic 350-60, recognize gains and losses from remeasurement.

40-4 Additionally, see the derecognition guidance in Section 350-20-40 regarding the disposal of all or a portion of a reporting unit.

ASC 350-10-40-2 states that “an entity shall account for the derecognition of a subsidiary or a group of assets that is either a business or nonprofit activity in accordance with the derecognition guidance in Subtopic 810-10.” See Section 2.4 of Deloitte’s Roadmap Business Combinations for more information about determining whether the group of assets represents a business and Section F.2 of Deloitte’s Roadmap Consolidation — Identifying a Controlling Financial Interest for further details on derecognizing a subsidiary or a group of assets that is either a business or nonprofit activity.

ASC 350-10-40-1 states that “[a]n entity shall account for the derecognition of a nonfinancial asset, including an in substance nonfinancial asset, within the scope of this Topic in accordance with Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, unless a scope exception from Subtopic 610-20 applies. For example, the derecognition of a nonfinancial asset in a contract with a customer shall be accounted for in accordance with Topic 606 on revenue from contracts with customers.” ASC 350-10-40-3 clarifies that until all of the criteria in ASC 606-10-25-1 are met, the entity does not derecognize the intangible asset, continues to amortize the intangible asset if it is finite-lived, and continues to test the intangible asset for impairment. See Chapter 17 of Deloitte’s Roadmap Revenue Recognition for more information about the sale of nonfinancial assets (and in-substance nonfinancial assets) within the scope of ASC 610-20.

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.