2.3 Other Long-Lived Assets | DART – Deloitte Accounting Research Tool

When determining the approach for the attribution of long-lived assets (e.g., PP&E or intangible assets) and whether to include such assets on the balance sheet of the carve-out entity, entities may consider factors noted in the beginning of this chapter and should assess the specific facts and circumstances and context of the transaction(s).

Under ASC 360, an entity must test long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Impairment losses should be recognized if the carrying amount of a long-lived asset (or its related asset group) (1) is not recoverable on the basis of projections of future undiscounted cash flows and (2) exceeds its fair value. Typically, long-lived assets assigned to a carve-out entity that were determined to be recoverable at the parent-entity level remain recoverable when considered at the carve-out level since, under ASC 360, long-lived assets are tested at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.1

If the parent entity has recorded historical impairment charges related to long-lived assets assigned to the carve-out entity (e.g., PP&E), such impairments would be reflected in the carve-out financial statements.