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

Kavya Textiles Ltd's balance sheet date is 31 March. The board intends to sell a division but expects completion only after several years, when a new unit is ready. The company asks whether Ind AS 105 permits held-for-sale classification. Which conclusion is correct?

Kavya Textiles cannot classify the division as held for sale. Ind AS 105 clarifies in paragraph 7 that an asset or disposal group is not held for sale when the entity intends to sell it in a distant future, and a sale several years away is such a case.

  1. ANo, because Ind AS 105 states that an asset or disposal group cannot be classified as held for sale if the entity intends to sell it in a distant futureCorrect
  2. BYes, because board intent to sell is the only condition
  3. CYes, provided the division is presented as a discontinued operation
  4. DYes, provided the division is measured at fair value

Explanation

Paragraph 7 in Ind AS 105 has a clarification that an intention to sell in a distant future prevents held-for-sale classification. Several years away is distant, so the division stays in ordinary classification. Option B ignores this added clarification.

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