Skip to content

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 has decided to sell a machine, but the sale is not expected to happen for several years and the entity intends to dispose of it only in a distant future. How does Ind AS 105, as notified in India, treat this machine?

The machine cannot be classified as held for sale. Ind AS 105 contains a clarification, added in paragraph 7 compared with IFRS 5, that an asset cannot be classified as held for sale if the entity intends to sell it only in a distant future, whatever the Board decision.

  1. AIt can be classified as held for sale because the Board has approved the decision
  2. BIt cannot be classified as held for sale, because the entity intends to sell it in a distant futureCorrect
  3. CIt is classified as held for sale and measured at fair value without deducting costs to sell
  4. DIt is classified as a discontinued operation because a sale decision exists

Explanation

Ind AS 105 adds a clarification in paragraph 7 (a difference from IFRS 5) 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. A Board decision alone does not suffice, so the first option is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 105 Non-current Assets Held for Sale and Discontinued OperationsFree diagnostic mock

More Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations questions