Impact of Extension of the Sale Completion Period on Classification of Non-current Assets Held for Sale
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- Last Updated on 2 November, 2023
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Para B1(c) of Ind AS 105, Non-Current Assets Held for Sale and Discontinued Operations, states that an extension of the period required to complete a sale does not preclude an asset (or disposal group) from being classified as held for sale if the delay is caused by events or circumstances beyond the entity’s control and there is sufficient evidence that the entity remains committed to its plan to sell the asset (or disposal group). An exception to the one-year requirement in paragraph shall therefore apply in the following situations in which such events or circumstances arise 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
(a) during the initial one-year period the entity took action necessary to respond to the change in circumstances,
(b) the non-current asset (or disposal group) is being actively marketed at a price that is reasonable, given the change in circumstances, and
(c) the criteria in paragraphs 7 and 8 are met.
This story discusses the impact of the classification of a machine held for sale in the previous year but not sold during the year.
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