The Gemara describes a number of conversations that took place between Rav Nahman, Ulla and Avimi bar Papi together with Rabbi Hiyya bar Ami on the topic of avodah zarah. For example, avodah zarah is ordinarily forbidden, and when sold, its proceeds are forbidden, as well. What if the avodah zarah was sold while in the hands of a non-Jew?
Rav Nahman suggests that this question can be answered by examining the ruling made by Rabbah bar Avuha who recommended to a group of potential converts that they should sell their avodah zarah prior to converting. Clearly he believed that the money that they would make from such a sale would be permitted.
The Gemara objects, arguing that perhaps in that case the reason that the money was permitted was not because the idols had been sold, but because the people were about to convert so they must have nullified them prior to selling them.
The idea behind the Gemara’s argument is that since these people planned to convert they certainly did not believe in the idols, and since a non-Jew can nullify avodah zarah we can assume that they did so, so that when they sold them the money that they received was not in exchange for avodah zarah. In his Torat Hayyim, Rabbi Avraham Hayyim Shorr asks why Rabbah bar Avuha recommended that the avodah zarah be sold before the people converted; if they nullified the idols then they could be sold even after the conversion took place. He answers that it was simply a matter of marit ayin – a concern lest it appear as though the newly converted Jews were benefitting from the sale of avodah zarah.
The Ritva explains that our Gemara does not mean that nullification took place before the sale, rather that the sale itself served as an act of nullification, which is why the money was permitted.