ASC 610-20 applies to transfers of all nonfinancial assets and in substance nonfinancial assets to parties that are not customers. The process for evaluating whether the transfer of assets to a counterparty is within the scope of ASC 610-20 is determined based on the ordering guidance addressing derecognition in ASC 610-20-15-10. The guidance does not change the derecognition model for financial assets under the scope of ASC 860, Transfers and Servicing, or businesses under the scope of ASC 810, Consolidation. For example, if the transferred set of activities and assets meets the definition of a business, the transaction is within the scope of the derecognition guidance in ASC 810. On the other hand, the sale of a subsidiary that does not meet the definition of a business is scoped out of ASC 810-10-40-3A when the underlying assets of the subsidiary are determined to be nonfinancial assets (or in substance nonfinancial assets) under ASC 610-20.

If a transaction is within the scope of ASC 610-20, in order for an entity to derecognize nonfinancial assets and recognize a gain or loss, the entity must lose control of the assets while also satisfying the criteria for transfer of control to another party under the new revenue recognition guidance. If these criteria are not met, an entity would continue to recognize the asset and record a liability for the consideration received. Situations may arise when a loss of control has occurred, but the transaction does not meet the transfer of control criteria in the revenue standard. For example, if the seller retains a call option to repurchase the assets, the transfer of control test will likely not be satisfied. In these situations, alternate guidance will need to be followed.

Under ASC 610-20, when an entity transfers its controlling financial interest in a nonfinancial asset (or in substance nonfinancial asset) but retains a noncontrolling ownership interest, the entity would measure such interest (including interests in joint ventures) at fair value, similar to the current guidance on the sale of businesses. This would result in full gain or loss recognition upon the sale of the nonfinancial asset (or in substance nonfinancial asset).

IFRS does not include the concept of in substance nonfinancial assets in its guidance. Accounting for a disposal under IFRS will usually depend on the nature of what is disposed. If a subsidiary is disposed of, an entity would generally follow the deconsolidation guidance in IFRS 10, Consolidated Financial Statements. If other assets are disposed of and not in the scope of the revenue standard, an entity would follow the related guidance (e.g., IAS 16 for property, plant, and equipment).

IAS 28, Investments in Associates and Joint Ventures, requires entities to recognize a partial gain or loss on contribution of nonfinancial assets that do not constitute a business (as defined in IFRS 3) to equity method investees and joint ventures for an interest in that associate unless the transaction lacks commercial substance.