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

Kaveri Realty Ltd, an Ind AS reporter, holds an office building as investment property, measured under the cost model of Ind AS 40. It plans to classify the building as held for sale. A finance trainee suggests that, as under IFRS 5, investment property carried at fair value should be excluded from the measurement requirements of Ind AS 105. Which is the correct response?

The trainee is wrong. Ind AS 40 prohibits the fair value model, so the IFRS 5 paragraph 5(d) exclusion for fair-valued investment property is deleted in Ind AS 105. The cost-model building is therefore covered by Ind AS 105 measurement requirements once classified as held for sale.

  1. AAgree, because Ind AS 105 retains the exclusion for investment property at fair value model
  2. BDisagree, because Ind AS 40 prohibits the fair value model, so paragraph 5(d) of IFRS 5 is deleted in Ind AS 105Correct
  3. CAgree, because investment property is always outside Ind AS 105
  4. DDisagree, because Ind AS 105 permits fair value model only for held-for-sale investment property

Explanation

IFRS 5 paragraph 5(d) excludes non-current assets accounted for under the fair value model in IAS 40. Since Ind AS 40 prohibits the fair value model, that paragraph is deleted in Ind AS 105. The building, carried at cost, is therefore subject to Ind AS 105 measurement, so the trainee's view is incorrect.

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