Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations, provides guidance on the accounting treatment for non-current assets that are classified as held for sale and the presentation of discontinued operations in the financial statements.
The standard defines non-current assets held for sale as assets that are available for immediate sale in their present condition and their sale is highly probable within a short period. When an asset is classified as held for sale, it is no longer depreciated, and its carrying amount is measured at the lower of its carrying amount or fair value less costs to sell.
Ind AS 105 also specifies the criteria for classifying a component of an entity as a discontinued operation. A component is classified as discontinued when it meets the following conditions: it represents a separate major line of business or geographical area of operations, it is part of a single coordinated plan to dispose of a separate major line of business or geographical area, or it is a subsidiary acquired exclusively with a view to resale.
When a component is classified as a discontinued operation, the results of its operations and any gain or loss on its disposal are presented separately in the financial statements. This presentation provides users of the financial statements with information about the financial performance and cash flows associated with the discontinued component.
Ind AS 105 also sets out the disclosure requirements for non-current assets held for sale and discontinued operations. These disclosures include information about the nature and financial effects of the discontinued operation, the cash flows attributable to the assets held for sale, and the expected timing of their disposal.
