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

Sundaram Industries Ltd. plans to dispose of a plant but, as per board discussion, intends to sell it only after several years once a new facility is commissioned. Which statement is correct under Ind AS 105 as carved in for the Indian context?

The plant cannot be classified as held for sale, because Ind AS 105 clarifies that an asset cannot be so classified when the entity intends to sell it in a distant future. Management approval of a plan alone does not meet the classification conditions.

  1. AIt may be classified as held for sale because management has approved a plan to sell
  2. BIt cannot be classified as held for sale because the entity intends to sell it in a distant futureCorrect
  3. CIt must be classified as held for sale because it is an item of plant, property and equipment
  4. DIt may be classified as held for sale if it is presented separately within non-current assets

Explanation

Ind AS 105 clarifies in paragraph 7 that a non-current asset (or disposal group) cannot be classified as held for sale if the entity intends to sell it in a distant future. This is a clarification added in the Indian standard compared with IFRS 5. Mere board approval does not suffice.

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