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Sale of McDonald's Businesses in China and Hong Kong Sale of McDonald's Businesses in China and Hong Kong
9 Months Ended
Sep. 30, 2017
Sale of McDonald's Businesses in China and Hong Kong [Abstract]  
Sale of McDonald's Businesses in China and Hong Kong Sale of McDonald's Businesses in China and Hong Kong
As previously announced, the Company completed the sale of its businesses in China and Hong Kong on July 31, 2017, comprising over 2,700 restaurants. The Company recorded a pre-tax gain of approximately $850 million reflecting the difference between $1.6 billion of cash proceeds and the net book value of the businesses. The gain also includes an increase to fair value of the retained 20% ownership in the entity that is operating the business subsequent to the transaction.
Based on the December 2016 approval of the sale by the Company’s Board of Directors, the Company concluded that the China and Hong Kong businesses were “Held for Sale” as of December 31, 2016. In accordance with the requirements of ASC 360 “Property, Plant and Equipment," the Company ceased recording depreciation expense with respect to the assets of both markets effective January 1, 2017, and reflected total assets and liabilities related to these businesses as held for sale on the December 31, 2016, condensed consolidated balance sheet.
Subsequent to the transaction, the Company is realizing its proportionate share of the entity's income. In addition, revenues have shifted from a combination of sales by Company-operated restaurants and franchised rent and royalty to franchised royalty only. The Company is now reporting the results for China and Hong Kong, as well as classifying related sales and restaurants, as affiliated.