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ASC 360 provides guidance for presentation and disclosure of long-lived assets. In accordance with ASC 360-10-05-2, the general subsections address property, plant, and equipment, including accumulated depreciation, while the impairment or disposal subsections provide additional guidance for the impairment or disposal of long-lived assets, which may include property, plant, and equipment, finite-lived intangible assets, right-of-use assets, and other assets part of an asset or disposal group.
ASC 360-10-50-1 provides the general disclosure requirements for property, plant, and equipment.

ASC 360-10-50-1

Because of the significant effects on financial position and results of operations of the depreciation method or methods used, all of the following disclosures shall be made in the financial statements or in notes thereto:
  1. Depreciation expense for the period
  2. Balances of major classes of depreciable assets, by nature or function, at the balance sheet date
  3. Accumulated depreciation, either by major classes of depreciable assets or in total, at the balance sheet date
  4. A general description of the method or methods used in computing depreciation with respect to major classes of depreciable assets.

In accordance with ASC 360-10-50-1(a), depreciation expense for the period is required to be disclosed. Some reporting entities comply with this disclosure requirement by presenting the amount on the statement of cash flows. In disclosing the major classes of depreciable assets, ASC 360-10-50-1(b) requires reporting entities to disclose depreciable assets by nature (e.g., machinery and equipment, buildings) or by function (e.g., manufacturing, marketing, transportation). In addition, consistent with ASC 360-10-50-1(d), reporting entities should disclose the useful lives of major classes of assets.
S-X 4-08(b) requires disclosure of any assets mortgaged, pledged, or otherwise subject to lien, and the obligations collateralized should be identified.

8.6.1 Held and used long-lived assets (impairment)

Specific impairment disclosures are required by ASC 360-10-50-2 when an impairment loss is recognized for long-lived assets classified as held and used. These disclosures are required in the period the impairment loss is recognized and for all periods in which the impairment loss is disclosed in the financial statements.

ASC 360-10-50-2

All of the following information shall be disclosed in the notes to the financial statements that include the period in which an impairment loss is recognized:
  1. A description of the impaired long-lived asset (asset group) and the facts and circumstances leading to the impairment
  2. If not separately presented on the face of the statement, the amount of the impairment loss and the caption in the income statement or the statement of activities that includes that loss
  3. The method or methods for determining fair value (whether based on a quoted market price, prices for similar assets, or another valuation technique)
  4. If applicable, the segment in which the impaired long-lived asset (asset group) is reported under Topic 280.

ASC 360-10-35-17 indicates that an impairment loss for a long-lived asset that is held and used should be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. If an entity intends to dispose of a long-lived asset before the end of its previously estimated useful life, SAB Topic 5.CC (codified in ASC 360-10-S99-2) reminds registrants that a long-lived asset should not be written down to an amount that would maintain a “normalized depreciation” rate. Normalized depreciation is the amount of depreciation otherwise expected to be recognized without adjustment for the asset's revised useful life. Once depreciation expense is revised to reflect a shortened useful life, it would be rare to bifurcate total depreciation expense and present a normalized depreciation amount and an excess or accelerated depreciation amount.
ASC 360-10-45-4 requires an impairment loss recognized for a long-lived asset (asset group) classified as held and used to be included in income from continuing operations before income taxes. If a subtotal such as “income from operations” is presented, that subtotal should include the impairment loss.

8.6.2 Held for sale long-lived assets

ASC 360 provides guidance for when to classify long-lived assets as held for sale.

Excerpt from ASC 360-10-45-9

A long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which all of the following criteria are met:
  1. Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group).
  2. The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups).
  3. An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated.
  4. The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale, within one year, except as permitted by paragraph 360-10-45-11.
  5. The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The price at which a long-lived asset (disposal group) is being marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group). A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available for immediate sale, whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale.
  6. Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Refer to PPE 5.3.1 for further details on how to apply the above requirements.
Once a long-lived asset (disposal) group, including an asset group considered a component of a reporting entity, meets these requirements, it is subject to the presentation and disclosure requirements in ASC 360-10-50-3.

ASC 360-10-50-3

For any period in which a long-lived asset (disposal group) either has been disposed of or is classified as held for sale (see paragraph 360-10-45-9), an entity shall disclose all of the following in the notes to financial statements:
  1. A description of the facts and circumstances leading to the disposal or the expected disposal.
  2. The expected manner and timing of that disposal. 
  3. The gain or loss recognized in accordance with paragraphs 360-10-35-37 through 35-45 and 360-10-40-5.
  4. If not separately presented on the face of the statement where net income is reported (or in the statement of activities for a not-for-profit entity), the caption in the statement where net income is reported (or in the statement of activities for a not-for-profit entity) that includes that gain or loss. 
  5. If not separately presented on the face of the statement of financial position, the carrying amount(s) of the major classes of assets and liabilities included as part of a disposal group classified as held for sale. Any loss recognized on the disposal group classified as held for sale in accordance with paragraphs 360-10-35-37 through 35-45 and 360-10-40-5 shall not be allocated to the major classes of assets and liabilities of the disposal group. 
  6. If applicable, the segment in which the long-lived asset (disposal group) is reported under Topic 280 on segment reporting.

In accordance with ASC 360-10-45-14, a long-lived asset classified as held for sale (but that does not meet the criteria for presentation as a discontinued operation in accordance with ASC 205-20-45-10) should be presented separately on the balance sheet of the current period. The prior period comparative balance sheet, if any, does not need to be recast. Refer to FSP 27 for the presentation and disclosure requirements associated with disposal groups classified as held for sale that qualify as discontinued operations.
The assets and liabilities of a disposal group classified as held for sale should not be offset or presented as a single amount; rather, those assets and liabilities should be presented separately in the asset and liability sections of the balance sheet. For example, captions such as current assets held for sale, noncurrent assets held for sale, current liabilities held for sale and noncurrent liabilities held for sale could be shown. The major classes of assets and liabilities classified as held for sale either should be presented separately on the face of the balance sheet or disclosed in the notes to financial statements (ASC 360-10-50-3(e)). In general, when assessing whether an asset is current, reporting entities may consider the guidance in ASC 210-10-45-1 through ASC 210-10-45-4. To classify all assets and liabilities held for sale as current, reporting entities may need to consider whether the disposal is expected to be consummated within one year of the balance sheet date and whether the reporting entity does not expect to use the sale proceeds to reduce long-term borrowings. If the sale proceeds are not expected to be used to pay down long-term borrowings, current classification may be acceptable.
Individually significant disposal not eligible for discontinued operations
In addition to the disclosures in ASC 360-10-50-3, there may be circumstances in which a long-lived asset (disposal group) includes an individually significant component of a reporting entity that either has been disposed of or is classified as held for sale, but does not meet the criteria for presentation as a discontinued operation in accordance with ASC 205-20. In such circumstances, additional disclosures are required in accordance with ASC 360-10-50-3A.

Excerpt from ASC 360-10-50-3A

  1. For a public business entity and a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, both of the following:
    1. The pretax profit or loss (or change in net assets for a not-for-profit entity) of the individually significant component of an entity for the period in which it is disposed of or is classified as held for sale and for all prior periods that are presented in the statement where net income is reported (or statement of activities for a not-for-profit entity) calculated in accordance with paragraphs 205-20-45-6 through 45-9             
    2. If the individually significant component of an entity includes a noncontrolling interest, the pretax profit or loss (or change in net assets for a not-for-profit entity) attributable to the parent for the period in which it is disposed of or is classified as held for sale and for all prior periods that are presented in the statement where net income is reported (or statement of activities for a not-for-profit entity).
  2. For all other entities, both of the following:
    1. The pretax profit or loss (or change in net assets for a not-for-profit entity) of the individually significant component of an entity for the period in which it is disposed of or is classified as held for sale calculated in accordance with paragraphs 205-20-45-6 through 45-9             
    2. If the individually significant component of an entity includes a noncontrolling interest, the pretax profit or loss (or change in net assets for a not-for-profit entity) attributable to the parent for the period in which it is disposed of or is classified as held for sale.

All reporting entities must provide the disclosures for the initial period in which an individually significant component is sold or classified as held for sale. An individually significant component that is held for sale should continue to provide the disclosures in each reporting period that it remains held for sale. Public business entities and certain not-for-profit entities must also include comparative disclosures for all periods presented in the income statement.
There is no guidance on how to evaluate whether an individual component is significant or whether to consider the gain or loss on disposal when determining significance. Reporting entities must exercise judgment in assessing significance and should consider both quantitative and qualitative factors about the effect of the disposal on their balance sheet, income statement, and statement of cash flows. Reporting entities should also consider whether disclosure should be provided when multiple disposals of individually insignificant components occur in the same reporting period.

8.6.2.1 Change to a plan of sale

Reporting entities may change a plan to sell a long-lived asset (disposal group). As discussed in ASC 205-20-50-3, in the period that decision is made, the reporting entities should describe the facts and circumstances leading to the decision to change the plan and its effect on the income statement for the period and any prior periods presented.
If the reporting entity decides not to sell a long-lived asset (disposal group) previously classified as held for sale, such asset (disposal group) should be reclassified as held and used in the period when the decision is made. Any required adjustment to the carrying amount due to the reclassification should be included in income from continuing operations in the period of the subsequent decision not to sell. This adjustment should be reported in the same income statement caption used to report a loss, if any, recognized in accordance with ASC 360-10-45-5. The results of operations of a component previously reported in discontinued operations in accordance with ASC 205-20-45-3 should be reclassified and included in income from continuing operations for all periods presented. Consistent with the income statement guidance regarding discontinued operations classification, we believe the preferable balance sheet presentation is to reclassify the assets and liabilities previously reported as held for sale to held and used. However, there may be other acceptable presentations.

8.6.2.2 Newly acquired asset classified as held for sale

ASC 360-10-45-12 provides specific criteria which, if met, require the acquirer to present newly-acquired assets as assets held for sale. The criteria requires a plan to dispose of the assets within a year, and that it be probable that the acquirer will meet the other held-for-sale criteria (discussed in FSP 8.6.2) within a short period of time after the acquisition date (usually within three months).

8.6.3 Additional disclosure requirements–recognized impairments

ASC 820-10-50 indicates that measurements based on fair value (e.g., non-recurring fair value measurements required by ASC 360) are also subject to the disclosure requirements in ASC 820. Required disclosures include the fair value measurement, relevant measurement date, reasons for the fair value measurement, valuation techniques, and information about the inputs to the fair value measurement, including significant unobservable inputs. Refer to FSP 20.3.1 for details regarding the general fair value disclosure requirements.
In addition to the fair value measurement disclosures, ASC 275-10-50 requires a reporting entity to disclose its use of estimates when the resolution of matters could differ significantly from what is currently expected, and if it is reasonably possible that the estimates will change in the near term and the effect of the change will be material. Disclosure may also be required under ASC 275 even if a reporting entity concludes that an impairment charge is not required. Refer to FSP 24.3.3 for further information about the requirements of ASC 275.

8.6.4 Disposal gain or loss

The guidance for presentation of a gain or loss recognized on the sale of a long-lived asset (disposal group) is set forth in ASC 360-10-45-5.

ASC 360-10-45-5

A gain or loss recognized (see Subtopic 610-20 on the sale or transfer of a nonfinancial asset) on the sale of a long-lived asset (disposal group) that is not a discontinued operation shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.

As discussed in ASC 360-10-S99-1, such amounts should also not be included as an adjustment to depreciation expense.
For guidance on the presentation of a gain or loss recognized on the sale of a disposal group that meets the definition of a business, see FSP 3.6.6.

8.6.5 Long-lived assets to be disposed of other than by sale

A long-lived asset to be disposed of other than by sale (e.g., by abandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff) should continue to be classified as held and used until it is disposed. Prior to disposal, all long-lived assets that are held and used are subject to the presentation and disclosure requirements discussed in FSP 8.6 and FSP 8.6.1.

8.6.6 Spare parts

It is not unusual for reporting entities to maintain “stores” items, which are spare maintenance materials and parts kept on hand as backup components in the event of equipment failure. Spare parts are also held on hand if the lead time to acquire new parts is long or contractual maintenance agreements require that the reporting entity maintain such parts on hand. These items are considered essential to the operations of the facility.
Although limited US GAAP guidance exists regarding the accounting for spare parts, it is appropriate to capitalize stores items because they have a service potential (when a part on a machine breaks down) and will provide future economic benefit to the reporting entities. These items are generally classified as current or noncurrent assets depending on a reporting entities’ specific facts and the nature of the reporting entities’ business. Spare parts that have significant value should generally be capitalized and depreciated over their useful lives or the remaining service lives of the related equipment. Alternatively, some companies consider spare parts as a current asset (e.g., inventory) that are not depreciated, but instead expensed when they are placed in service (similar to maintenance expense).
Reporting entities should consider the relevant facts and circumstances associated with their spare parts to determine whether they should be classified as long-lived assets or inventory. The policy should be consistently applied. Refer to PPE 1.5.3 for additional information related to the accounting and classification of spare parts.
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