3.9 Changes to a Plan of Sale
ASC 360-10
Changes to a Plan of Sale
35-44 If circumstances arise that previously were considered unlikely and, as a result, an entity decides not to sell a long-lived asset (disposal group) previously classified as held for sale, the asset (disposal group) shall be reclassified as held and used. A long-lived asset that is reclassified shall be measured individually at the lower of the following:
- Its carrying amount before the asset (disposal group) was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the asset (disposal group) been continuously classified as held and used
- Its fair value at the date of the subsequent decision not to sell.
35-45 If an entity removes an individual asset or liability from a disposal group previously classified as held for sale, the remaining assets and liabilities of the disposal group to be sold shall continue to be measured as a group only if the criteria in paragraph 360-10-45-9 are met. Otherwise, the remaining long-lived assets of the group shall be measured individually at the lower of their carrying amounts or fair values less cost to sell at that date.
45-10 If at any time the criteria in [ASC 360-10-45-9] are no longer met (except as permitted by [ASC 360-10-45-11]), a long-lived asset (disposal group) classified as held for sale shall be reclassified as held and used in accordance with paragraph 360-10-35-44.
ASC 205-20
45-1F If at any time the criteria in paragraph 205-20-45-1E are no longer met (except as permitted by paragraph 205-20-45-1G), an entity to be sold that is classified as held for sale shall be reclassified as held and used and measured in accordance with paragraph 360-10-35-44.
If, at any time, the held-for-sale criteria are no longer met, the disposal
group should be reclassified as held and
used and
should be measured, in accordance with ASC 360-10-35-44, at the lower of:
-
“Its carrying amount before the asset (disposal group) was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the asset (disposal group) been continuously classified as held and used.”
-
“Its fair value at the date of the subsequent decision not to sell.”
In addition, as of the date on which the held-for-sale criteria are no longer met, the statement of financial position and notes to the financial statements should no longer separately identify the assets and liabilities of the disposal group as held for sale, and any amounts that had been reported in discontinued operations should be reclassified to continuing operations for all periods presented.
In some cases, an entity may decide to retain an asset or liability that it had
previously determined to be part of a disposal group classified as held for sale.
ASC 360-10-35-45 states, in part, that “[i]f an entity removes an individual asset
or liability from a disposal group previously classified as held for sale, the
remaining assets and liabilities of the disposal group to be sold shall continue to
be measured as a group only if the [held-for-sale criteria] are met.”
Example
3-6
Company C has a wholly owned subsidiary, Subsidiary D. Subsidiary D represents a
component of C. Company C plans to dispose of D in its
entirety and, at the end of the first quarter, C determines
that D meets the criteria to be classified as held for sale
and reported as a discontinued operation.
In the third quarter, C decides to retain certain fixed assets of D while
continuing to pursue a disposal of D’s remaining net assets
and operations. In accordance with ASC 360-10-45-10, in the
third quarter, C reclassifies to assets held and used the
fixed assets it no longer seeks to dispose of and measures
those fixed assets at the lower of (1) their carrying
amounts before being classified as held for sale less
depreciation expense that would have been recognized if they
had not been classified as held for sale or (2) the fair
value as of the date of the subsequent decision not to sell.
Company C must reassess whether D’s remaining net assets and
operations continue to meet the criteria for classification
as held for sale and, if so, whether the criteria for
reporting as a discontinued operation continue to be met.