Disposal of Fixed Productive Assets

Category

Cash Flow

Units

Currency

US-GAAP elements

ProceedsFromSaleOfPropertyPlantAndEquipment

Reference

ASC 230, Statement of Cash Flows (investing activities); ASC 360

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Disposal of fixed productive assets is the cash a company received during a period from selling physical long-lived assets used in its operations, such as land, buildings, machinery, vehicles, and equipment. It is an inflow in the investing section of the cash flow statement.

It includes only physical assets. Sales of intangible assets and of entire businesses are reported on other lines.

In XBRL, companies tag this line ProceedsFromSaleOfPropertyPlantAndEquipment. It mirrors the purchase line for property, plant, and equipment and covers the same kinds of assets: those used to produce goods and services and not held for sale in the normal course of business. When a company sells an asset, ASC 360 requires it to remove the asset's cost and accumulated depreciation and recognize a gain or loss for the difference between the proceeds and the remaining book value. The gain or loss is reversed out of net income in the operating section, and the full cash received appears here.

Some businesses sell physical assets as part of their normal operations, and their treatment can differ. Rental car and equipment rental companies, for example, regularly sell used fleet vehicles, and some classify those proceeds according to how the assets were held. Assets reclassified as held for sale are still reported here when sold, but beforehand they move off the property line on the balance sheet. A sale-leaseback that qualifies as a sale under ASC 842 also produces proceeds here, while one that fails sale accounting is treated as a financing arrangement.

Analysts often subtract these proceeds from purchases of property and equipment to get net capital expenditures. That is reasonable for businesses that routinely sell used equipment. For a company that sells a headquarters building or a large plant, the proceeds are a one-time event and should not be allowed to flatter a recurring cash flow measure.