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Chapter 3 — Long-Lived Assets to Be Sold

3.3 Held-for-Sale Criteria

3.3 Held-for-Sale Criteria

ASC 360-10 {ASC 205-20}
360-10-45-9 {205-20-45-1E} A long-lived asset (disposal group) to be sold {component of an entity or a group of components of an entity, or a business or nonprofit activity (the entity to be sold)}, shall be classified as held for sale in the period in which all of the following criteria are met:
  1. Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group) {entity to be sold}.
  2. The asset (disposal group) {entity to be sold} is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups) {entities to be sold}. (See Examples 5 through 7 [paragraphs 360-10-55-37 through 55-42], which illustrate when that criterion would be met.)
  3. An active program to locate a buyer {or buyers} and other actions required to complete the plan to sell the asset (disposal group) {entity to be sold} have been initiated.
  4. The sale of the asset (disposal group) {entity to be sold} is probable, and transfer of the asset (disposal group) {entity to be sold} is expected to qualify for recognition as a completed sale, within one year, except as permitted by paragraph 360-10-45-11 {205-20-45-1G}. (See Example 8 [paragraph 360-10-55-43], which illustrates when that criterion would be met.) The term probable refers to a future sale that is likely to occur.
  5. The asset (disposal group) {entity to be sold} is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The price at which a long-lived asset {an entity to be sold} is being marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group) {entity to be sold}. A market price that is reasonable in relation to fair value indicates that the asset (disposal group) {entity to be sold} is available for immediate sale, whereas a market price in excess of fair value indicates that the asset (disposal group) {entity to be sold} is not available for immediate sale.
  6. Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.