Indian Accounting Standard 105

Indian Accounting Standard (Ind AS) 105
Objective
The objective of this Indian Accounting Standard (Ind AS) is to specify the accounting for
assets held for sale, and the presentation and disclosure of discontinued operations. In
particular, this Ind AS requires:
(a) assets that meet the criteria to be classified as held for sale to be measured at the
lower of carrying amount and fair value less costs to sell, and depreciation on such
assets to cease; and
(b) assets that meet the criteria to be classified as held for sale to be presented
separately in the balance sheet and the results of discontinued operations to be
presented separately in the statement of profit and loss.
Classification of non-current assets (or disposal groups) as held for sale or as held
for distribution to owners
An entity shall classify a non-current asset (or disposal group) as held for sale if its
carrying amount will be recovered principally through a sale transaction rather than
through continuing use.
For this to be the case, the asset (or disposal group) must be available for immediate
sale in its present condition subject only to terms that are usual and customary for sales
of such assets (or disposal groups) and its sale must be highly probable. Thus, an asset
(or disposal group) cannot be classified as a non-current asset (or disposal group) held
for sale, if the entity intends to sell it in a distant future.
For the sale to be highly probable, the appropriate level of management must be
committed to a plan to sell the asset (or disposal group), and an active programme to
locate a buyer and complete the plan must have been initiated. Further, the asset (or
disposal group) must be actively marketed for sale at a price that is reasonable in
relation to its current fair value. In addition, the sale should be expected to qualify for
recognition as a completed sale within one year from the date of classification, except as
permitted by paragraph 9, and actions required to complete the plan should indicate
that it is unlikely that significant changes to the plan will be made or that the plan will
be withdrawn. The probability of shareholders’ approval (if required in the jurisdiction)
should be considered as part of the assessment of whether the sale is highly probable.
An entity that is committed to a sale plan involving loss of control of a subsidiary shall
classify all the assets and liabilities of that subsidiary as held for sale when the criteria
set out in paragraphs 6–8 are met, regardless of whether the entity will retain a non-
controlling interest in its former subsidiary after the sale.
Events or circumstances may extend the period to complete the sale beyond one year.
An extension of the period required to complete a sale does not preclude an asset (or
disposal group) from being classified as held for sale if the delay is caused by events or
circumstances beyond the entity’s control and there is sufficient evidence that the entity
remains committed to its plan to sell the asset (or disposal group). This will be the case
when the criteria in Appendix B are met.
Measurement of non-current assets (or disposal groups) classified as held for sale
An entity shall measure a non-current asset (or disposal group) classified as held for
sale at the lower of its carrying amount and fair value less costs to sell.
An entity shall measure a non-current asset (or disposal group) classified as held for
distribution to owners at the lower of its carrying amount and fair value less costs to
distribute
Recognition of impairment losses and reversals
An entity shall recognise an impairment loss for any initial or subsequent write-down of
the asset (or disposal group) to fair value less costs to sell, to the extent that it has not
been recognised in accordance with paragraph 19.
An entity shall recognise a gain for any subsequent increase in fair value less costs to sell
of an asset, but not in excess of the cumulative impairment loss that has been recognised
either in accordance with this Ind AS or previously in accordance with Ind AS 36,
Impairment of Assets.
Presentation and disclosure

An entity shall present and disclose information that enables users of the financial
statements to evaluate the financial effects of discontinued operations and disposals of
non-current assets (or disposal groups).

Indian Accounting Standard 105

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Indian Accounting Standard (Ind AS) 105

Presentation and disclosure

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