Ind AS 105: Non-current Assets Held for Sale and Discontinued…

Standard orientation

What Ind AS 105 is designed to achieve

Specify accounting for assets held for sale or distribution and the presentation and disclosure of discontinued operations.

Scope: Classification and presentation apply to recognised non-current assets and disposal groups. Certain deferred-tax, employee-benefit, financial, investment-property, biological and insurance assets remain measured under their own standards.

Held for sale

Recovery principally through sale rather than continuing use.

Measurement

Lower of carrying amount and fair value less costs to sell.

Depreciation

Stops while classified, for assets within measurement scope.

Discontinued operation

A separate major line, geography or qualifying resale acquisition.

Full standard map

Paragraph-by-paragraph register

Paragraphs	Requirement and simple decode
1	Objective Requires separate classification, lower measurement and distinct discontinued-operation presentation.
2–5	Scope Explains broad classification scope and measurement exceptions.
6–8	Held-for-sale criteria Immediate availability, high probability, management commitment, active marketing, reasonable price and completion normally within one year.
9	One-year extensions Allow when delay is beyond control and commitment remains.
10–11	Assets acquired for resale Can qualify at acquisition if criteria are expected shortly.
12	Criteria after reporting date Do not classify at reporting date; disclose material later decisions.
12A	Held for distribution Apply similar immediate-availability and high-probability criteria.
13–14	Abandoned and idle assets Abandoned assets are not held for sale; temporary non-use is not abandonment.
15–18	Measurement Apply other standards first, then lower of carrying amount and fair value less costs to sell/distribute.
19	Sale beyond one year Recognise present-value unwinding of selling costs as finance cost.
20–23	Impairment and allocation Recognise write-down and limited reversal; allocate disposal-group loss using Ind AS 36 order.
24	Assets outside measurement scope Continue to measure under their own standards.
25	Depreciation and interest Stop depreciation/amortisation for scoped assets; continue interest and disposal-group liability expenses.
26–29	Plan changes Cease or switch classification using prescribed remeasurement.
30–32	Presentation and definition Separate continuing and discontinued operations; define the qualifying component.
33	Discontinued-operation statement Present one post-tax amount and analyse revenue, expenses, tax, gain/loss and cash flows.
34–36	Comparatives and continuing involvement Re-present comparative discontinued results and update for retained involvement or failed classification.
37	Other disposals Material gains or losses remain within continuing operations with disclosure.
38–40	Balance sheet Present held-for-sale assets and disposal-group liabilities separately without offsetting.
41–42	Additional disclosure Describe facts, timing, segment, gains/losses and plan changes.
43–44L	Effective-date history Tracks distribution, financial-instrument, revenue, lease and insurance amendments.
Appendix A	Definitions Defines component, disposal group, costs to sell/distribute, highly probable and discontinued operation.
Appendix B	Application guidance Covers availability, pricing, shareholder approval, one-year exceptions and sale/distribution changes.

Major areas decoded

Technical requirements in simple language

Management commitment

A strategic review is insufficient; the plan must be executable and unlikely to change.

Immediate availability

Normal customary conditions are acceptable, but major repairs before sale can prevent classification.

One-year rule

Regulatory or buyer delays may qualify only when beyond the entity's control.

Disposal group

Measure excluded assets under their standards before applying the disposal-group lower test.

Discontinued threshold

Not every held-for-sale asset is a discontinued operation.

Comparatives

Prior discontinued results are re-presented; balance-sheet comparatives are generally not similarly reclassified.

Visual learning

Finin2min decision map

Exceptions

What professionals overlook

Deferred tax, employee-benefit and financial assets retain their own measurement.
Assets acquired exclusively for resale may qualify quickly.
Abandoned assets are not held for sale.
Depreciation stops only for assets within measurement scope.
Completion beyond one year is permitted only in limited circumstances.
Sale and distribution classifications may switch directly when criteria remain met.
Discontinued operation is a higher threshold than held for sale.

Practical application

Transaction examples

Fact

Treatment

Reason

Factory marketed and immediately available

Held for sale if highly probable

Recovery is through sale.

Building needing major refurbishment before buyer acceptance

Not immediately available

Continue normal accounting.

Subsidiary acquired exclusively for resale

Potential held for sale and discontinued

Apply acquisition-date and major-component tests.

Permanently closed plant without sale plan

Abandoned

Not held for sale.

Regulatory delay beyond one year

May remain classified

Only when beyond control and commitment continues.

Minor vehicle fleet disposal

Held for sale but not discontinued

Not a major business component.

Accounting mechanics

Illustrative journal entries

Write-down

Dr Impairment loss Cr Held-for-sale asset / Disposal-group impairment

Permitted recovery

Dr Asset / Disposal-group impairment Cr Reversal gain

Sale

Dr Cash / Receivable Dr Disposal-group liabilities Cr Held-for-sale assets Cr Gain (or Dr Loss)

Classification failure

Dr Asset under applicable standard Cr Held-for-sale adjustment

Exam and boardroom

Applied case studies

1. Unreasonable price

Applied case

A business worth about ₹650 crore is marketed for ₹900 crore with no buyer interest.

Finin2min analysis: Pricing may undermine the highly probable criterion.

2. Required shareholder approval

Applied case

Management has not assessed whether shareholder approval is probable.

Finin2min analysis: Classification needs evidence that required approval is highly probable.

3. Major business line

Applied case

A division representing 35% of revenue is held for sale.

Finin2min analysis: If distinguishable and major, present as discontinued operation with comparative re-presentation.

4. Mixed disposal group

Applied case

A subsidiary includes PPE, deferred tax and financial assets.

Finin2min analysis: Apply Ind AS 12 and 109 to excluded assets before Ind AS 105 lower measurement.

5. Plan withdrawn

Applied case

A buyer fails financing and management decides to retain the asset.

Finin2min analysis: Cease classification and apply paragraph 27 measurement, including catch-up effects.

Global comparison

Ind AS versus IFRS and US GAAP

Topic	Ind AS	IFRS	US GAAP
Core model	Lower of carrying amount and FVLCTS; stop depreciation.	Broadly aligned with IFRS 5.	Similar US model with detailed differences.
Distribution	Explicit owner-distribution model.	Aligned.	US treatment differs by distribution.
Discontinued definition	Separate major line/geography.	Broadly aligned.	US GAAP uses a strategic-shift threshold.
Comparative P&L	Re-present discontinued results.	Aligned.	Retrospective presentation subject to US criteria.
Exceptions	Specified assets retain own measurement.	Broadly aligned.	Scoped exceptions differ.

Implementation

Stakeholder implications

CFO/Strategy

Document commitment, price and execution.

M&A/Legal

Track approvals and buyer conditions.

FP&A

Separate continuing and discontinued forecasts.

Tax

Assess disposal and deferred-tax effects.

Audit committee

Challenge timing, price and threshold.

Watchlist

Common errors

Classifying on intention alone.
Ignoring immediate availability.
Using unrealistic asking price.
Stopping interest on liabilities.
Skipping other standards before Ind AS 105.
Treating every disposal as discontinued.
Classifying abandonment as held for sale.
Not re-presenting discontinued comparatives.
Keeping classification after plan withdrawal.
Offsetting disposal-group assets and liabilities.

Finin2min Q&A

Frequently asked questions

1. What are the core conditions?

Immediate availability and a highly probable transaction.

2. Does depreciation stop?

Yes for assets within the Ind AS 105 measurement scope.

3. Is every held-for-sale item discontinued?

No.

4. Can sale take more than one year?

Only in limited beyond-control circumstances.

5. Are balance-sheet comparatives reclassified?

Generally no merely because current assets are held for sale.

6. What if the plan changes?

Cease classification and remeasure under paragraph 27.

Two-minute revision

Finin2min cheat sheet

AVAILABLE NOW + HIGHLY PROBABLE + ONE YEAR → LOWER OF CA/FVLCTS → STOP DEPRECIATION → TEST DISCONTINUED

Validation register

Primary sources

ICAI Compendium 2025–26 Volume IPrimary or authoritative validation source.
Open source ↗

ICAI Educational Material — Ind AS 105Primary or authoritative validation source.
Open source ↗

IFRS Foundation — IFRS 5Primary or authoritative validation source.
Open source ↗

FASB CodificationPrimary or authoritative validation source.
Open source ↗