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Non-current Assets Held for Sale and Discontinued Operations

Ind AS - 105 - Rules - B. Indian Accounting Standards (Ind AS) - Companies (Indian Accounting Standards) Rules, 2015 - Ind AS - 105 - Indian Accounting Standard (Ind AS) 105 (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles.) Objective 1 The objective of this Indian Accounting Standard (Ind AS) is to specify the accounting for assets held for sale, and the presentation and disclos .....

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classification and presentation requirements of this Ind AS apply to all recognised non-current assets1 and to all disposal groups of an entity. The measurement requirements of this Ind AS apply to all recognised non-current assets and disposal groups (as set out in paragraph 4), except for those assets listed in paragraph 5 which shall continue to be measured in accordance with the Standard noted. 3 Assets classified as non-current in accordance with Ind AS 1, Presentation of Financial Statemen .....

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together in a single transaction. Such a disposal group may be a group of cash-generating units, a single cash-generating unit, or part of a cash-generating unit.2 The group may include any assets and any liabilities of the entity, including current assets, current liabilities and assets excluded by paragraph 5 from the measurement requirements of this Ind AS. If a non-current asset within the scope of the measurement requirements of this Ind AS is part of a disposal group, the measurement requ .....

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(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 109, Financial Instruments. (d) [Refer Appendix 1] (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. 5A The classification, presentation and measurement requirements in this Ind AS applica .....

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nless those Ind ASs require: (a) specific disclosures in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations; or (b) disclosures about measurement of assets and liabilities within a disposal group that are not within the scope of the measurement requirement of Ind AS 105 and such disclosures are not already provided in the other notes to the financial statements. Additional disclosures about non-current assets (or disposal groups) classified .....

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e case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. Thus, an asset (or disposal group) cannot be classified as a non-current asset (or disposal group) held for sale, if the entity intends to sell it in a distant future. 8 For the sale to be highly probable, the appropriate level of management must be committed to a .....

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ndicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The probability of shareholders approval (if required in the jurisdiction) should be considered as part of the assessment of whether the sale is highly probable. 8A An entity that is committed to a sale plan involving loss of control of a subsidiary shall classify all the assets and liabilities of that subsidiary as held for sale when the criteria set out in paragraphs 6-8 are met, r .....

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ell the asset (or disposal group). This will be the case when the criteria in Appendix B are met. 10 Sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance in accordance with Ind AS 16, Property, Plant and Equipment. 11 When an entity acquires a non-current asset (or disposal group) exclusively with a view to its subsequent disposal, it shall classify the non-current asset (or disposal group) as held for sale at the acqui .....

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d. 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 specified in paragraph 41(a), (b) and (d) in the notes. 12A A non-current asset (or disposal group) is classified as held for distribution to owners when the entity is committed to distribute the asset (or disposal group) to the owners. For this to be the case, the assets must be available for immediate distribution in their p .....

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e jurisdiction) should be considered as part of the assessment of whether the distribution is highly probable. Non-current assets that are to be abandoned 13 An entity shall not classify as held for sale a non-current asset (or disposal group) that is to be abandoned. This is because its carrying amount will be recovered principally through continuing use. However, if the disposal group to be abandoned meets the criteria in paragraph 32(a)-(c), the entity shall present the results and cash flows .....

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. Measurement of non-current assets (or disposal groups) classified as held for sale Measurement of a non-current asset (or disposal group) 15 An entity shall 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. 15A An entity shall measure a non-current asset (or disposal group) classified as held for distribution to owners at the lower of its carrying amount and fair value less costs to distribute.4 16 .....

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sale is expected to occur beyond one year, the entity shall measure the costs to sell at their present value. Any increase in the present value of the costs to sell that arises from the passage of time shall be presented in profit or loss as a financing cost. 18 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 ASs. .....

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sequent write-down of the asset (or disposal group) to fair value less costs to sell, to the extent that it has not been recognised in accordance with paragraph 19. 21 An entity shall recognise a gain for any subsequent increase in fair value less costs to sell of an asset, but 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, Impairment of Assets. 22 An entity shall recognise a gain for any .....

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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 paragraphs 104(a) and (b) and 122 of Ind AS 36 . 24 A gain or loss not previously recognised by the date of the sale of a noncurrent asset (or disposal group) shall be recognised at the date of derecognition. Requirements relating to derecognition are set out in: (a) paragraphs 67-72 of Ind AS 16 for .....

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26. If an entity has classified an asset (or disposal group) as held for sale or as held for distribution to owners, but the criteria in paragraphs 7-9 (for held for sale) or in paragraph 12A (for held for distribution to owners) are no longer met, the entity shall cease to classify the asset (or disposal group) as held for sale or held for distribution to owners (respectively). In such cases an entity shall follow the guidance in paragraphs 27-29 to account for this change except when paragraph .....

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rements in this Ind AS that are applicable to the new method of disposal. (b) shall measure the non-current asset (or disposal group) by following the requirements in paragraph 15 (if reclassified as held for sale) or 15A (if reclassified as held for distribution to owners) and recognise any reduction or increase in the fair value less costs to sell/costs to distribute of the non-current asset (or disposal group) by following the requirements in paragraphs 20-25. (c) shall not change the date of .....

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arrying amount before the asset (or disposal group) was classified as held for sale or as held for distribution to owners, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale or as held for distribution to owners, and (b) its recoverable amount at the date of the subsequent decision not to sell or distribute5.] 4[28 The entity shall include any required adjustment to the carrying amount .....

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ibution to owners is a subsidiary, joint operation, joint venture, associate, or a portion of an interest in a joint venture or an associate. The entity shall present that adjustment in the same caption in the statement of profit and loss used to present a gain or loss, if any, recognised in accordance with paragraph 37.] 5[29 If an entity removes an individual asset or liability from a disposal group classified as held for sale, the remaining assets and liabilities of the disposal group to be s .....

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sified as held for sale (or as held for distribution to owners) shall be measured individually at the lower of their carrying amounts and fair values less costs to sell (or costs to distribute) at that date. Any non-current assets that do not meet the criteria for held for sale shall cease to be classified as held for sale in accordance with paragraph 26. Any non-current assets that do not meet the criteria for held for distribution to owners shall cease to be classified as held for distribution .....

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tity. In other words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use. 32 A discontinued operation is a component of an entity that either has 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 co-ordinated plan to dispose of a separate major line of business or geographical area of operations or (c) is a su .....

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ax profit or loss of discontinued operations; (ii) the related income tax expense as required by paragraph 81(h) of Ind AS 12; and (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. (iv) the related income tax expense as required by paragraph 81(h) of Ind AS 12. The analysis may be presented in the notes or in the statement of profit and loss. If it is presented in th .....

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he 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 (see paragraph 11). (d) the amount of income from continuing operations and from discontinued operations attributable to owners of the parent. These disclosures may be presented either in the notes or in the statement of profit and loss. 33A [Refer Appendix 1] 34 An entity shall re-present the .....

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h adjustments shall be disclosed. Examples of circumstances in which these adjustments may arise include the following: (a) the resolution of uncertainties that arise from the terms of the disposal transaction, such as the resolution of purchase price adjustments and indemnification issues with the purchaser. (b) the resolution of uncertainties that arise from and are directly related to the operations of the component before its disposal, such as environmental and product warranty obligations r .....

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described as having been re-presented. 36A An entity that is committed to a sale plan involving loss of control of a subsidiary shall disclose the information required in paragraphs 33-36 when the subsidiary is a disposal group that meets the definition of a discontinued operation in accordance with paragraph 32. Gains or losses relating to continuing operations 37 Any gain or loss on the remeasurement of a non-current asset (or disposal group) classified as held for sale that does not meet the .....

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alance sheet. Those assets and liabilities shall not be offset and presented as a single amount. The major classes of assets and liabilities classified as held for sale shall be separately disclosed either in the balance sheet or in the notes, except as permitted by paragraph 39. An entity shall present separately any cumulative income or expense recognised in other comprehensive income relating to a non-current asset (or disposal group) classified as held for sale. 39 If the disposal group is a .....

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disclosures 41 An entity shall disclose the following information in the notes in the period in which a non-current asset (or disposal group) has been either classified as held for sale or sold: (a) a description of the non-current asset (or disposal group); (b) a description of the facts and circumstances of the sale, or leading to the expected disposal, and the expected manner and timing of that disposal; (c) the gain or loss recognised in accordance with paragraphs 20-22 and, if not separatel .....

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mstances leading to the decision and the effect of the decision on the results of operations for the period and any prior periods presented. 1For assets classified according to a liquidity presentation, non-current assets are assets that include amounts expected to be recovered more than twelve months after the reporting period. Paragraph 3 applies to the classification of such assets. 2 However, once the cash flows from an asset or group of assets are expected to arise principally from sale rat .....

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sset is part of a cash-generating unit, its recoverable amount is the carrying amount that would have been recognised after the allocation of any impairment loss arising on that cash-generating unit in accordance with Ind AS 36. 6Unless the asset is property, plant and equipment or an intangible asset that had been revalued in accordance with Ind AS 16 or Ind AS 38 before classification as held for sale, in which case the adjustment shall be treated as a revaluation increase or decrease. Appendi .....

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disposal group), excluding finance costs and income tax expense. current asset An entity shall classify an asset as current when: (a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle; (b) it holds the asset primarily for the purpose of trading; (c) it expects to realise the asset within twelve months after the reporting period; or (d) the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is restricted from being exchange .....

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group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. The group includes goodwill acquired in a business combination if the group is a cash-generating unit to which goodwill has been allocated in accordance with the requirements of paragraphs 80-87 of Ind AS 36, Impairment of Assets, or if it is an operation within such a cash generating unit. fair v .....

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erformance highly probable. highly probable Significantly more likely than probable. non-current asset An asset that does not meet the definition of a current asset. probable More likely than not. recoverable amount The higher of an asset s fair value less costs to sell and its value in use. value in use The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Appendix B Application supplement This .....

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nt in paragraph 8 shall therefore apply in the following situations in which such events or circumstances arise: (a) at the date an entity commits itself to a plan to sell a non-current asset (or disposal group) it reasonably expects that others (not a buyer) will impose conditions on the transfer of the asset (or disposal group) that will extend the period required to complete the sale, and: (i) actions necessary to respond to those conditions cannot be initiated until after a firm purchase com .....

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s is expected. (c) during the initial one-year period, circumstances arise that were previously considered unlikely and, as a result, a non-current asset (or disposal group) previously classified as held for sale is not sold by the end of that period, and: (i) during the initial one-year period the entity took action necessary to respond to the change in circumstances, (ii) the non-current asset (or disposal group) is being actively marketed at a price that is reasonable, given the change in cir .....

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ndard (Ind AS) 105 and the corresponding International Financial Reporting Standard (IFRS) 5, , issued by the International Accounting Standards Board. Comparison with IFRS 5, 1 The transitional provisions given in IFRS 5 have not been given in Ind AS 105, since all transitional provisions related to Ind ASs, wherever considered appropriate have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards, corresponding to IFRS 1, First-time Adoption of International Financial .....

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esentation of discontinued operations in the separate income statement, where separate income statement is presented under paragraph 33A of IFRS 5 have been deleted. This change is consequential to the removal of option regarding two statement approach in Ind AS 1. Ind AS 1 requires that the components of profit or loss and components of other comprehensive income shall be presented as a part of the statement of profit and loss. However, paragraph number 33A has been retained in Ind AS 105 to ma .....

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sposal group) cannot be classified as held for sale, if the entity intends to sell it in a distant future. - Notes:- 1. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, Changes to a plan of sale 26 If an entity has classified an asset (or disposal group) as held for sale, but the criteria in paragraphs 7-9 are no longer met, the entity shall cease to classify the asset (or disposal group) as held for sale. 2. Inserted vide F. No. 01/01/2009-CL-V(Part) - Date .....

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