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CA Final · Financial Reporting · Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations

Ind AS 105 differs from IFRS 5 in the conditions for classifying a non-current asset as held for sale. Which of the following reflects that difference? Rohini Ltd has a machine and intends to sell it, but only after about four years once a new plant is commissioned.

The machine cannot be classified as held for sale. Ind AS 105 adds a clarification to paragraph 7 that an asset or disposal group cannot be held for sale if the entity intends to sell it in a distant future, and a sale four years away is distant.

  1. AThe machine cannot be classified as held for sale because Ind AS 105 clarifies that an asset cannot be so classified if the entity intends to sell it in a distant futureCorrect
  2. BThe machine can be classified as held for sale as soon as management decides to sell it, whatever the timing
  3. CThe machine can be classified as held for sale if it is depreciated over the four years
  4. DThe machine must be classified as held for sale because it will be recovered mainly through sale

Explanation

Paragraph 7 of Ind AS 105 carries an added clarification that an asset or disposal group cannot be classified as held for sale if the entity intends to sell it in a distant future. A sale planned about four years away fails this. Option B ignores the clarification and treats intention alone as enough.

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