Option 3: Treat as a non-operating item
A business unit asset may be sold by corporate management without any real input from the business unit on either the disposition or the sale price. If the sale yields cash proceeds, then lack of business unit input would argue for one of the above alternative treatments.
On the other hand, corporate management may force a business unit to surrender an asset for no clear benefit to the business unit. For example, the company may receive rights in exchange for the asset that yield no current benefits and that may never be exercisable by the surrendering business unit. If the business unit has no input on actions affecting the disposition of an asset, then they should not be held accountable for gains or losses on those assets.
Assets and income affected by corporate disposition decisions affecting business unit EP should be treated as non-operating from the business unit's perspective.
This adjustment is made by adding back the "non-operating" asset to net assets, and any income derived by the asset to the business unit's income. Any implied gain on sale of the asset should be added to the business unitÂ’s net assets equal to capitalized EP such that the reduced capital would result in a capital charge equal to the foregone EP of the disposed asset.
