A reporting entity that has filed a petition for bankruptcy should continue to assess its long-lived assets for indicators of impairment in accordance with the provisions of ASC 360-10. The nature of the asset (i.e., held and used or held for sale) determines how to measure and record such impairment in the financial statements. A reporting entity should consider the significance of any changes to the reorganization plan affecting expected cash flow forecasts of its asset groups as well as a reporting entity’s commitment to a plan to sell long-lived assets.

Events or changes in circumstances that arise from the ongoing bankruptcy proceedings may result in a material and sustained decrease in the cash flows generated from long-lived assets that are held and used. Adverse interactions with customers, suppliers, and vendors are examples of factors that would impact the cash flow projections used in the recoverability test for long-lived assets in most scenarios. Additional examples of factors, commonly referred to as impairment indicators or triggering events, are included in ASC 360-10-35-21.

If a reporting entity meets all of the criteria in ASC 360-10-45-9 to classify assets as held for sale, the disposal group should be reported at its fair value, less cost to sell, beginning in the period the held-for-sale criteria are met. See PPE 5.3 for additional information.