Ind As 105 Presentation
Ind As 105 Presentation
Ind As 105 Presentation
(a) assets that meet the criteria to be classified as held for sale to be measured
at the lower of carrying amount and fair value less costs to sell, and
depreciation on such assets to cease; and
(b) assets that meet the criteria to be classified as held for sale to be presented
separately in the balance sheet and the results of discontinued operations
to be presented separately in the statement of profit and loss.
Criteria for classifying existing assets as held for sale
An entity should measure a non-current asset (or disposal group) classified as held
for sale at the lower of its carrying amount and fair value less costs to sell.
Teaser!
M1 (classified as NCA held for sale) carrying amount as on March 31, 2018
is Rs. 100 Mn.
Fair value less cost to sell is Rs. 110 Mn. as on March 31, 2018.
Teaser!
M1 carrying amount as on March 31, 2018 is Rs. 10 lakhs with remaining
economic life 5 years). Method of depreciation SLM.
On Oct. 1, 2018 ABC Ltd. (owner of M1) classified M1 as NCA held for sale.
Determine carrying amount of M1 as on March 31, 2019 at cost.
Teaser!
Cadila Healthcare Ltd. purchased a generator set on 01.01.2019 for Rs. 1,00,000
(economical life 5 years) with an intention to sell. How it will be classified as on
March 31, 2019 –
a. Current asset?
b. NCA held for sale?
c. NCA – PPE?
d. NCA – Investment property?
Criteria for classifying existing assets as held for sale
i. A property being used as a headquarters by the entity needs to be sold. Property can be
vacated only after a replacement is available
ii. A manufacturing facility, prior to selling the needs to clear a backlog of uncompleted order.
iii. In above example (ii), if entity intends to sell the manufacturing facility along with the
uncompleted orders.
1 a. Exception to the period of One year
An entity can still classify an asset (or disposal group) as held for sale, even if the timeframe of
one year to conclude the sale transaction has lapsed. For this:
i. the delay must have been caused by the events or circumstances which are beyond the
control of the entity; and
ii. there must be sufficient evidences that the entity is still committed to it selling plan.
Teaser - Available for Immediate Sale?
An entity is committed to its selling plan of a manufacturing facility in its present condition
and so classifies it as held for sale. After a firm purchase commitment, the buyer’s inspection
identifies environmental damages not previously known to exist. The entity is required by the
buyer to make good the damage, which will extend the timeframe of one year to complete
the sale within one year. However the entity has initiated actions to make good the damage
and satisfactory rectification is highly probable.
When an entity acquires a non-current asset (or disposal group) exclusively with a view to its
subsequent disposal, the non-current asset (or disposal group) is classified as held for sale at
the acquisition date.
This standard provides a short period (usually three months) to meet the classification criteria
that don’t met at the acquisition except requirement of one year.
Teaser - Available for Immediate Sale?
An entity has acquired a building exclusively with a view of its subsequent disposal. The
management is highly confident that the property can be sold in one year. The property
requires refurbishing it to enhance its value which is highly probable to be completed in less
than a period of three months.
1 d. Criteria met after reporting period
If the criteria of held for sale are met after the reporting period but before the date of
authorization the financial statements, a non-current asset should not classify as held for sale.
However, when those criteria are met after the reporting period but before the approval of
the financial statements for issue, the entity shall disclose the information.
Question 1:
Should the factory be shown as held for sale as on March 31, 20X1?
Question 2:
On March 31, 2016 ABC Ltd. classified M1 as NCA held for sale and reported it at cost for
Rs. 5,00,000.
As on March 31, 2016 remaining economic life of M1 was 5 years. ABC was following SLM
method of depreciation on M1 with depreciation amount of Rs. 1 lakh pa.
On March 31, 2018 ABC Ltd. decides to use M1 and not to sell. Determine its carrying
amount as on March 31, 2018 at cost.
Extension:
What if recoverable amount of M1 as on March 31, 2018 is –
a. Rs. 4,00,000
b. Rs. 2,50,000
Indian Data
NCA held for sale
N M D C Ltd. 5