Derecognition of an Asset

The carrying amount of an asset would be derecognized upon;

• disposal
• expectation that the asset ceases to perform its use or be useful

A gain or loss may ensure which would then be included in profit and loss "when" the asset is derecognized. IAS 17 may require further investigation if there is a sale and leaseback transaction.

IAS 18 stipulates how to account for revenue for assets which are routinely bought and sold as part of the ordinary business. Property, plant and equipment held for transfer or sale once no longer rented are also derecognized as assets according to IAS 18 and proceeds recognized as revenue. IFRS 5 does not apply in the case of assets held for sale in the ordinary business operations. IFRS 5 does apply for assets held for sale, not normally expected under the normal operating conditions and activities of the daily business.

Derecognition of an asset which leads to the asset being transferred to an item of inventory may occur upon:

• sale and leaseback (IAS 17)
• donation
• entering into a financing lease
• sale

According to IAS 18 Revenue, if an asset is  disposed of and the consideration received, equals a nominal amount which is less than the cash price equivalent to be had from the asset under normal conditions, the difference is recorded as interest revenue.