Chapter 4 — Long-Lived Assets to Be Disposed of Other Than by Sale

4.3 Nonmonetary Exchange

A nonmonetary exchange is a reciprocal transaction that involves an exchange of assets (or liabilities) or services with another entity. ASC 360-10-45-15 requires that a long-lived asset or asset group to be disposed of in an exchange, measured on the basis of the recorded amount of the nonmonetary asset relinquished, continue to be classified as held and used until it is disposed of. A nonmonetary exchange that meets any of the below criteria in ASC 845-10-30-3 must be recognized on the basis of the recorded amount of the nonmonetary asset given up.

ASC 845-10

30-3 A nonmonetary exchange shall be measured based on the recorded amount (after reduction, if appropriate, for an indicated impairment of value as discussed in paragraph 360-10-40-4) of the nonmonetary asset(s) relinquished, and not on the fair values of the exchanged assets, if any of the following conditions apply:

The fair value of neither the asset(s) received nor the asset(s) relinquished is determinable within reasonable limits.
The transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange.
The transaction lacks commercial substance (see [ASC 845-10-30-4]).

By contrast, if the nonmonetary exchange does not meet any of the conditions in ASC 845-10-30-3, the exchange is accounted for at fair value. In that case, we believe that the disposal should be assessed as a sale transaction and the disposal group should be classified as held for sale when the criteria are met (see Section 3.3).

A decision to engage in a nonmonetary exchange does not, in and of itself, indicate that the asset being exchanged is not recoverable. However, an entity should consider its specific facts and circumstances in determining whether the exchange represents an indicator of impairment. If so, the asset or assets should be tested for impairment on a held-and-used basis if they are classified as held and used or on a held-for-sale basis if the exchange is at fair value and the held-for-sale classification criteria are met.

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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.