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Chapter 17 — Sales of Nonfinancial Assets Within the Scope of ASC 610-20

17.3 Unit of Account

17.3 Unit of Account

ASU 2017-05 clarifies that the unit of account is defined as a distinct nonfinancial asset.1 At the inception of a contract, an entity should therefore identify each distinct nonfinancial and in-substance nonfinancial asset in accordance with the guidance on identifying distinct performance obligations in ASC 606 (see Chapter 5). The entity should then, in a manner consistent with the approach outlined in ASC 606 (see Chapters 7 and 8), allocate consideration to each distinct asset and derecognize the asset when a counterparty obtains control of it.

Footnotes

1
In paragraph BC53 of ASU 2017-05, the FASB clarified that for a partial sales transaction structured as the sale of an ownership interest in a consolidated subsidiary, “an entity should evaluate whether it transfers control of the distinct underlying asset and not the ownership interest” in the legal entity that holds the asset.