This standard in general specifies :- Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations. This standard in general specifies :- Accounting for Non Current assets held for sale - RMP Presentation & Disclosure of Discontinued Operations

And In particular it requires assets that meet the criteria to be classified as held for sale (i) to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; and (ii) to be presented separately in the statement of financial position and (b)(ii) the results of discontinued operations to be presented separately in the statement of comprehensive income.

Applicability : Classification & Presentation Requirements shall be applied to all of Non Current assets and all disposable groups Measurement Requirements shall be applied to all recognised non-current assets and disposable groups except the one specified in Para 5

Measurement Criteria Not Applicable to Following Assets – Ind AS 105.5 (a) deferred tax assets (Ind AS 12 Income Taxes). (b) assets arising from employee benefits (Ind AS 19 Employee Benefits). (c) financial assets within the scope of Ind AS 39 Financial Instruments: Recognition and Measurement. (d) non-current assets that are accounted for in accordance with the fair value model in Ind AS 40 Investment Property…..What About IP Under Cost Model ? (e) non-current assets that are measured at fair value less costs to sell in accordance with Ind AS 41 Agriculture. (f) contractual rights under insurance contracts as defined in Ind AS 104 Insurance Contracts. Rationale ?

Principal Criteria Secondary Criteria An entity shall classify an asset or disposal group as “Held For Sale” If Its carrying amount will be principally recovered Through sale rather than use through continuing use & This criteria must be met before the end of the reporting period Secondary Criteria The asset (or disposal group) must be available for immediate sale in its present condition Subject to terms that are usual & customary for sales of such assets And its sale must be highly probable = this happens upon fulfilment of other criteria's===>> A Current Asset being sold as an Individual asset ( Not as a part of a disposal group )will never be classified as HFS ` in Ind AS

the plan will be made or that the plan will be withdrawn. Appropriate Level of Management must be Committed Active programme to locate a buyer and complete the plan Actively marketed for sale at a price that is reasonable The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification Actions should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Probability of Share holder’s Approval to be considered

Ind AS 105 applicable to non current assets held for distribution to owners also The classification, presentation and measurement requirements in this Ind AS applicable to a non-current asset (or disposal group) that is classified as held for sale apply also to a non-current asset (or disposal group) that is classified as held for distribution to owners acting in their capacity as owners (held for distribution to owners).

Quiz 1 On November 30, 2011, Entity X becomes committed to a plan to sell a property. However, it plans certain renovations to increase its value prior to selling it. The renovations are expected to be completed within a short span of time i.e., 2 months. Can the property be classified as held for sale at the reporting date i.e., December 31, 2011?

Acquisition of a non-current asset (or disposal group) exclusively with a view to its subsequent disposal, Classification AT Acquisition date If & Only If the criteria of sale within a year is met. The other criteria of available immediately for sale in its present condition and sale is highly probable need not be at the acquisition date but must be met within a short period following the acquisition (usually within three months – Non adjusting event)

Events or circumstances may extend the period to complete the sale beyond one year, such extension is justified in following circumstances. Justification Beyond a Year Management Committed – Expects others may impose conditions Firm Purchase Commitment is made – Buyer unexpectedly imposes conditions Unforeseen Circumstances

the end of the reporting period but before the authorisation of the 1. Are the following statements about the requirements of IFRS5 Non-current assets held for sale and discontinued operations true or false? (1) An asset that meets the criteria for classification as held for sale after the end of the reporting period but before the authorisation of the financial statements should be measured in the statement of financial position at the lower of carrying amount and fair value less costs to sell. (2) To be classified as an asset held for sale, the sale must be expected to be completed within 12 months from the end of the financial year. Statement (1) Statement (2) A False False B False True C True False D True True

Both statements are false. IFRS5 para 8 requires an expectation that the sale will be completed within 12 months of the date of classification as held for sale, and not of the end of the financial year. Para 12 prohibits adjustment to the carrying amount of an asset classified as held for sale after the year end.

Following assets are not to be classified as Held For Sale Abandoned Assets are not to be classified as “Held for Sale “ This is because its carrying amount will be recovered principally through continuing use. Those assets taken out temporarily out of use.

Steps Apply Criteria Existing Non Current Assets Classify as Non current assets held for sale Measure at lower of carrying amount and fair value less cost to sale or less cost to distribute as the case may be. ( Only incremental cost ,not facility holding cost) Newly Acquired Non Current Assets If the newly acquired non-current assets meet the criteria then initially they are measured at lower of its carrying amount had it not been so classified ( i.e. cost) and fair value less cost to sale.

Just BEFORE Initial Classification Immediately before the initial classification of the asset (or disposal group) as held for sale, the carrying amounts of the asset (or all the assets and liabilities in the group) shall be measured in accordance with applicable Ind AS 105.18

Impairment loss in Profit or Loss of the Period Non Current Assets held for sale should NOT be depreciated. Interest & other expenses associated with liability will continue to be recognised. Impairment loss in Profit or Loss of the Period UPON Classification Recognise any anticipated losses on immediate or subsequent sale Immediately . AS As Also

Gain from subsequent increase in Fair value For a Non Current assets Such gain shall be recognised but not in excess of cumulative impairment loss under Ind AS 105 or Ind AS 36. For Group of Assets Not in excess of the cumulative impairment loss that has been recognised, either in accordance with this IFRS or previously in accordance with Ind AS 36, on the non-current assets that are within the scope of the measurement requirements of this IFRS. The impairment loss (or any subsequent gain) recognised for a disposal group shall reduce (or increase) the carrying amount of the non-current assets in the group that are within the scope of the measurement requirements of this IFRS, in the order of allocation set out in Ind AS 36 For a Non Current assets Such gain shall be recognised but not in excess of cumulative impairment loss under Ind AS 105 or Ind AS 36. For Group of Assets Not in excess of the cumulative impairment loss that has been recognised, either in accordance with this Ind AS or previously in accordance with Ind AS 36, on the non-current assets that are within the scope of the measurement requirements of this Ind AS. The impairment loss (or any subsequent gain) recognised for a disposal group shall reduce (or increase) the carrying amount of the non-current assets in the group that are within the scope of the measurement requirements of this Ind AS, in the order of allocation set out in Ind AS 36

CHANGE OF PLANS Any adjustment to the value should be shown in income from continuing operations for the period. If an asset is removed from a disposal group, the disposal group will continue to be classified as such only if it still meets the criteria set out in the Standard. If the criteria are not met, then the individual noncurrent assets of the group will be reviewed to see if they meet the criteria to be classified as held for sale.

Its recoverable amount at the date of the decision not to sell. As adjusted for any subsequent depreciation, amortization, or revaluation Asset or group of Asset to be valued at the lower of the carrying amount BEFORE the asset or disposal group was classified as held for sale Change of Plan Asset or Group of Asset Cease to be Held for Sale AND

Presentation of Non Current assets or disposal group classified as held for sale. Entity shall present non current assets and related liabilities separately. Assets and liabilities shall not be offset If the disposal group is a newly acquired subsidiary that meets the criteria to be classified as held for sale on acquisition disclosure of the major classes of assets and liabilities is not required. An entity shall not reclassify or re-present amounts presented for non-current assets or for the assets and liabilities of disposal groups classified as held for sale in the statements of financial position for prior periods to reflect the classification in the statement of financial position for the latest period presented.

Discontinued Operations is a component of an entity that has either been disposed off Or is classified as held for sale.

Discontinued Operations (DOP) Represents a separate major line of business or geographical area of operations :or Is a part of a single Co-ordinated plant to dispose of a separate major line of business or geographical area of operations: or Is a subsidiary acquired exclusively with a view to resale.

Presenting Discontinued Operations P Or L An entity shall disclose: (a) a single amount in the statement of comprehensive income comprising the total of: the post-tax profit or loss of discontinued operations and (ii) the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation.

Presenting Discontinued Operations – P Or L Further an analysis of the single amount into: (i) the revenue, expenses and pre-tax profit or loss of discontinued operations; (ii) the related income tax expense as required by paragraph 81(h) of Ind AS 12; (iii) the gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation; and (iv) the related income tax expense as required by paragraph 81(h) of Ind AS 12. If an entity ceases to classify a component as held for sale, the results of that element must be reclassified and included in income from continuing operations.

Presentation in Statement of Cash Flow The net cash flows attributable to the operating, investing and financing activities of discontinued operations. These disclosures may be presented either in the notes or in the financial statements. These disclosures are not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition .

Important issues concerning Restatement Only for Discontinued Operations & Not for Non Current Held for sale. NCH4S = SOFP, Related Liability Not to be Offset. DOP = SOCI + SOCF

DISCLOSURE: NONCURRENTASSETS Noncurrent assets held for sale and assets of disposal groups must be disclosed separately from other assets in the balance sheet. The liabilities must also be disclosed separately in the balance sheet. Several other disclosures are required, including a description of the noncurrent assets of a disposal group, a description of the facts and circumstances of the sale, and the expected manner and timing of that disposal. Any gain or loss recognized for impairment or any subsequent increase in the fair value less costs to sell should also be shown in the applicable segment in which the noncurrent assets or disposal group is presented.

DISCONTINUED OPERATIONS:PRESENTATION AND DISCLOSURE Any cumulative income or expense recognized directly in equity relating to a noncurrent asset or disposal group classified as held for sale must be disclosed. A discontinued operation is a part of an entity that has either been disposed of or is classified as held for sale and (a) Represents a separate major line of business or geographical area of operations; (b) Is part of a single coordinated plan to dispose of separate major line of business or geographical area of operations; or (c) Is a subsidiary acquired exclusively with a view to resale.