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

Sunrise Textiles Ltd is preparing its Ind AS financial statements. The board is evaluating a plant it intends to sell, but the sale is planned only in a distant future. Which statement is correct as per the Ind AS 105 text provided, which points to the difference from IFRS 5 in paragraph 7?

The plant cannot be classified as held for sale. Ind AS 105 adds a clarification to paragraph 7 that an asset or disposal group cannot be classified as held for sale where the entity intends to sell it only in a distant future.

  1. AThe plant can be classified as held for sale if management is merely committed to a plan to sell it at some time in the future
  2. BThe plant cannot be classified as held for sale if the entity intends to sell it in a distant futureCorrect
  3. CThe plant must be classified as held for sale because Ind AS 105 has no timing condition
  4. DThe plant is classified as held for sale only after it has been sold and the proceeds received

Explanation

The Ind AS 105 clarification added to paragraph 7 states 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. Option A ignores this added clarification, and C is wrong because the timing condition exists.

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