3.2 Grouping Assets to Be Sold
Assets may be sold individually or as part of a group of assets (and
possibly liabilities). The ASC master glossary defines a disposal group as
follows:
A disposal group for a long-lived asset or assets
to be disposed of by sale or otherwise represents assets to be disposed of
together as a group in a single transaction and liabilities directly associated
with those assets that will be transferred in the transaction. A disposal group
may include a discontinued operation along with other assets and liabilities
that are not part of the discontinued operation.
A disposal group may include not only long-lived assets that are
within the scope of ASC 360-10 but also other assets such as receivables, inventory,
indefinite-lived intangible assets, or goodwill. A disposal group may also “include
a discontinued operation along with other assets and liabilities that are not part
of the discontinued operation.” In addition, a disposal group may include
liabilities directly associated with the assets that will be transferred to the
buyer. Examples of such liabilities include environmental obligations, asset
retirement obligations, and mortgage obligations.
Further, certain operations to be sold may qualify for discontinued-operations
reporting even if the assets associated with those operations do not contain
long-lived assets that are within the scope of ASC 360-10 (e.g., an equity method
investment). For that reason, the same held-for-sale criteria in ASC 360-10-45-9
were incorporated into ASC 205-20-45-1E to allow entities to classify a component of
an entity as held for sale even though the component may not include long-lived
assets that are within the scope of ASC 360-10.
Connecting the Dots
For simplicity, the term “disposal group” is used throughout this publication
to refer to an asset, a group of assets (and possibly liabilities), or a
component of an entity that is classified as held for sale by the entity.