Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations: A Practitioner Guide for FY 2026-27
Ind AS 105 (Non-current Assets Held for Sale and Discontinued Operations) is the Indian Accounting Standard that prescribes how to account for and present non-current assets held for sale and discontinued operations in financial statements.
The Ministry of Corporate Affairs notified Ind AS 105 via the Companies (Indian Accounting Standards) Rules, 2015. It became effective on a voluntary basis from 1 April 2015 and mandatory from 1 April 2016 (Phase I). Ind AS 105 supersedes AS 24 (Discontinuing Operations) for companies adopting Ind AS.
For FY 2026-27, conglomerates such as Tata Group or Aditya Birla Group frequently apply Ind AS 105 when undertaking strategic divestitures or business portfolio rebalancing. Timely classification of assets as held for sale is critical to avoid audit qualifications.
Ind AS 105 at a Glance
Ind AS 105 sets out the accounting treatment and presentation requirements when an entity classifies non-current assets or disposal groups as held for sale or identifies discontinued operations. The standard primarily serves statutory auditors, CFOs, finance teams in listed companies, and CA Final students seeking clarity on asset classification and disclosure.
| Field | Value |
|---|---|
| Standard Number | Ind AS 105 |
| Full Name | Non-current Assets Held for Sale and Discontinued Operations |
| Issuing Body | ICAI (Accounting Standards Board) |
| Notified By | MCA, Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015 |
| Effective Date | 1 April 2015 (voluntary), 1 April 2016 (mandatory Phase I) |
| Supersedes | AS 24 (Discontinuing Operations) for Ind AS-applicable entities |
| Equivalent Standard | AS 24 ↔ Ind AS 105 ↔ IFRS 5 |
| Applies To | All companies required to follow Indian Accounting Standards. Ind AS 105 specifies the accounting for non-current assets held for sale and the presentation and disclosure of discontinued operations. |
What is Ind AS 105: Non-current Assets Held for Sale and Discontinued Operations?
Ind AS 105 defines how an entity must classify, measure, present, and disclose non-current assets that are expected to be recovered principally through sale rather than continuing use. It also prescribes how discontinued operations should appear in financial statements.
The Institute of Chartered Accountants of India introduced this standard as part of India's convergence with International Financial Reporting Standards. Its predecessor was Accounting Standard (AS) 24; however, only with the adoption of IFRS-based standards did India formalise the 'held-for-sale' concept along with single-line discontinued operations presentation.
CFOs of listed companies, statutory auditors conducting audits under SA 700, finance controllers in conglomerates or NBFCs, and CA students preparing for exams frequently refer to this standard.
Objective of Ind AS 105
- Specify the accounting for assets held for sale and the presentation and disclosure of discontinued operations.
- Require classification as held for sale to result in measurement at lower of carrying amount and fair value less costs to sell.
- Establish presentation format separating discontinued operations from continuing operations in P&L.
The objective ensures that users receive transparent information about significant disposals or business closures. This supports a true and fair view as required by Section 129 of the Companies Act, 2013. Accurate application enables stakeholders to assess ongoing business performance separately from divested or closed segments.
Who Must Apply Ind AS 105?
Entities covered, applicability table
Ind AS 105 applies mandatorily to all companies that have adopted Indian Accounting Standards as per the Ministry of Corporate Affairs roadmap:
| Category | Applicability Timeline |
|---|---|
| Listed companies | Phase I, Mandatory from FY 2016-17 |
| Unlisted large cos | Phase II, Mandatory from FY 2017-18 if net worth ≥ Rs 250 crore |
| NBFCs | Phase III/IV, From FY 2018-19 based on size/listing status |
Entities preparing consolidated financial statements under Section 129(3) must apply this standard at both standalone and group levels where applicable.
Scope exclusions
Ind AS 105 does not apply to:
- Deferred tax assets (see Ind AS 12)
- Financial instruments (see Ind AS 109)
- Investment property measured at fair value (see Ind AS 40; however, Indian context mandates cost model so not relevant)
- Biological assets related to agricultural activity (see Ind AS 41)
When the standard does not apply
Deferred tax assets are covered under Ind AS 12 Income Taxes. Financial instruments fall within the scope of Ind AS 109 Financial Instruments. Investment property at fair value would be addressed by Ind AS 40 Investment Property; however, since India requires cost model application under local rules, this exclusion rarely arises in practice. Biological assets are accounted per Ind AS 41 Agriculture.
Key Definitions under Ind AS 105
| Term | Definition |
|---|---|
| Held for sale | Asset or disposal group expected to be recovered mainly through sale rather than use |
| Disposal group | Group of assets plus directly associated liabilities disposed together in one transaction |
| Discontinued operation | Component disposed or classified as held-for-sale representing major line/geography |
| Costs to sell | Incremental costs directly attributable to disposal excluding finance costs/income tax |
| Fair value less costs to sell | Fair value per Ind AS 113 minus costs directly attributable to selling |
Recognition and Measurement under Ind AS 105
When to recognise
An entity must classify a non-current asset or disposal group as 'held for sale' when it expects recovery principally through sale rather than continuing use. Para 7-8 require two main criteria:
The asset must be available immediately in its present condition subject only to usual terms.
The sale must be highly probable, management committed; active buyer search underway; marketed at reasonable price; expected completion within one year.
Discontinued operation status arises when a component classified as held-for-sale represents a separate major line of business or geographical area per Para 32.
Initial measurement
On classification as held-for-sale:
The entity measures the asset/disposal group at the lower of:
Carrying Amount **or** Fair Value less Costs to Sell (FVLCS)
Any shortfall is recognised immediately in profit or loss as an impairment loss. Depreciation/amortisation ceases from date of classification (Para 25). This cessation is a critical audit trigger, continuing depreciation signals misclassification risk.
Example formula:
Measurement on classification = min(Carrying Amount; FVLCS)
If FVLCS exceeds carrying amount, no gain is recognised on initial classification.
Subsequent measurement
At each reporting date until disposal:
The entity reassesses FVLCS against carrying amount. If FVLCS declines further below carrying amount, additional impairment loss is booked immediately in P&L. If FVLCS increases after previous write-downs, reversal up to cumulative impairment recognised since classification may be credited back but never above original carrying amount before classification.
If criteria are no longer met, e.g., management withdraws asset from sale, the asset returns to its previous category (e.g., PPE). The new carrying amount becomes the lower of:
(a) Carrying amount before 'held-for-sale' adjusted by depreciation/amortisation that would have been charged had it not been classified;
(b) Recoverable amount at date reclassification decision made (Para 27).
Discontinued Operations - Single-Line P&L Presentation
Ind AS 105 mandates single-line post-tax profit/loss presentation on face of statement of profit & loss for discontinued operations (Para 33). Comparative periods must be restated accordingly.
Notes must break down revenue, expenses, pre-tax profit/loss, tax expense/income attributable specifically to discontinued operations. Cash flows from operating/investing/financing activities relating solely to discontinued operations require separate disclosure per Para 33(c).
Assets/liabilities forming part of disposal groups classified as held-for-sale appear separately on balance sheet, not aggregated with continuing operations lines.
Earnings per share relating specifically to continuing versus discontinued operations are presented either on face or notes as required by both this standard and Ind AS 33.
This approach enhances comparability between periods by isolating effects from major disposals or closures, a key issue flagged repeatedly by NFRA during recent inspections in our audit practice.
Worked Examples on Ind AS 105
Example 1: Subsidiary classified as held for sale
Maharashtra Holdings decides on January 1st, 2026 to sell its loss-making logistics subsidiary. Buyer identified; sale expected within six months. Carrying amount in consolidated financials Rs 80 crore; estimated fair value Rs 65 crore; costs to sell Rs 2 crore.
Computation Table
| Item | Amount (Rs crore) | Explanation |
|---|---|---|
| Carrying Amount | Rs 80 | As per CFS before reclassification |
| Fair Value | Rs 65 | Estimated proceeds |
| Costs To Sell | Rs 2 | Directly attributable |
| FV less Costs To Sell | Rs 63 | Rs65, Rs2 |
| Impairment Loss | Rs 17 | Rs80, Rs63 |
Journal Entries
On classification:
Dr Impairment Loss on Held-for-Sale (P&L, within discontinued ops): Rs17 crore
Cr Disposal Group Held For Sale: Rs17 crore
Reclassify net assets:
Dr Disposal Group Held For Sale: Rs63 crore
Cr Various asset/liability lines previously recognised totaling Rs63 crore
Depreciation/amortisation ceases from January 1st 2026 onwards. Logistics division qualifies as major line, presented as discontinued operation in P&L; related balance sheet items move into ‘held-for-sale’ lines until actual disposal occurs.
Example 2: Plant held for sale, simple case
Sundaram Engineering plans disposal of an obsolete plant meeting all ‘held-for-sale’ criteria as at March 1st 2026. Carrying amount Rs12 crore (cost Rs25 crore less accumulated depreciation Rs13 crore). Estimated fair value Rs8 crore; costs to sell Rs0.50 crore.
Computation Table
| Item | Amount (Rs crore) | Explanation |
|---|---|---|
| Carrying Amount | Rs12 | Net book value |
| Fair Value | Rs8 | Estimated market price |
| Costs To Sell | Rs0.50 | Auction/brokerage |
| FV less Costs To Sell | Rs7.50 | Rs8, Rs0.50 |
| Write-down | Rs4.50 | Rs12, Rs7.50 |
Journal Entries
On classification:
Dr Non-current Asset Held For Sale: Rs7.50 crore
Dr Impairment Loss:Rs4.50 crore
Dr Accumulated Depreciation:Rs13 crore
Cr PPE - Plant:Rs25 crore
On actual disposal:
Dr Bank:Rs7.20 crore
Dr Loss On Disposal:Rs0.80 crore
Dr Costs To Sell:Rs0.50 crore
Cr Held For Sale:Rs7.50 crore
Cr Bank:Rs0.50 crore
Depreciation stops upon reclassification March 1st 2026 even if final settlement occurs later, critical audit point often missed by preparers during year-end closing procedures.
Disclosure Requirements under Ind AS 105
Disclosures under Ind AS 105 are critical for compliance with Schedule III to the Companies Act, 2013. They ensure users can distinguish the effects of held-for-sale assets and discontinued operations from continuing business. The standard prescribes specific line items, narrative explanations, and quantitative breakdowns in both the financial statements and notes.
| Item | Requirement | Para Reference |
|---|---|---|
| Single line for discontinued operations | Post-tax profit or loss of discontinued operation on face of P&L | Para 33 |
| Breakdown of discontinued operation results | Revenue, expenses, profit before tax, tax, post-tax in notes | Para 33(b) |
| Cash flows of discontinued operations | Operating, investing, financing - separately disclosed | Para 33(c) |
| Description of held-for-sale assets and circumstances of sale | Including expected manner and timing of disposal | Para 41 |
| Gain or loss recognised on classification or remeasurement | Including reversal | Para 41(c) |
| Segment reporting impact | Reportable segment in which the asset is presented | Para 41(d) |
| Reclassifications when held-for-sale criteria no longer met | Disclosure required | Para 42 |
Auditors must verify these disclosures as part of their reporting responsibilities under SA 700 to ensure true and fair presentation.
Common Mistakes & Industry-Specific Considerations
Common errors auditors flag
- Classifying assets as held for sale without highly-probable sale criteria (most common error; “we are looking to sell” is insufficient).
- Continuing depreciation on assets correctly classified as held for sale.
- Failing to test impairment immediately on classification as held for sale.
- Misclassifying disposal of a single product line as a discontinued operation when it does not represent a major line of business.
- Inadequate cash flow disclosure for discontinued operations.
- Failure to restate prior period comparatives for discontinued operations.
Industry application notes
Conglomerates: Strategic divestitures and business portfolio rebalancing trigger Ind AS 105 application. Tata-Bisleri-style divestments require careful timing for classification. In our audit practice we frequently observe delayed recognition leading to audit qualifications.
Banks (asset disposals): Stressed asset sales to Asset Reconstruction Companies (ARCs) or other banks may meet held-for-sale criteria. Measurement intersects with provisioning requirements under Ind AS 109 Financial Instruments, requiring close coordination between finance and risk teams.
Real estate: Project-level disposals often meet disposal group criteria. Held-for-sale classification accelerates recognition of write-downs, impacting quarterly results for listed developers such as DLF Ltd or Oberoi Realty Ltd.
Ind AS 105 vs AS 24 vs IFRS: Key Differences
The table below compares key aspects across Indian GAAP (AS 24), Ind AS 105, and IFRS 5:
| Aspect | AS | Ind AS | IFRS |
|---|---|---|---|
| Held-for-sale concept | Not formalised | Formalised (Para 7-8 criteria) | Same as Ind AS |
| Discontinued operations | AS 24 - similar concept | Major line of business or geographical area | Same |
| Measurement after classification | Per individual standards | Lower of CA and FVLCS (Para 15) | Same |
| Depreciation cessation | Per individual standards | Ceases on classification (Para 25) | Ceases on classification |
| Single-line P&L presentation | AS 24 separate disclosure | Single line + breakdown | Single line + breakdown |
India’s adoption of Ind AS 105 aligns closely with IFRS 5. The main carve-out arises in investment property measurement: while IFRS permits fair value through profit or loss, Indian rules require the cost model under Ind AS 40. The ‘held-for-sale’ formalisation is unique to Ind AS/IFRS; legacy Indian GAAP did not mandate this approach.
Latest Amendments to Ind AS 105 (FY 2026-27)
No amendments have been notified to Ind AS 105 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.
Related Standards You Should Know
- [AS 24](/as-24-discontinuing-operations/), Equivalent discontinuing operations standard for non-Ind AS companies; held-for-sale concept less developed.
- [Ind AS 36](/ind-as-36-impairment-of-assets/), Impairment testing prior to held-for-sale classification.
- [Ind AS 113](/ind-as-113-fair-value-measurement/), Fair value measurement for FVLCS computation.
- [Ind AS 33](/ind-as-33-earnings-per-share/), EPS for continuing and discontinued operations separately.
- [Ind AS 110](/ind-as-110-consolidated-financial-statements/), Subsidiary disposal under Ind AS 110 with Ind AS 105 classification.
Need Help with Ind AS 105 Compliance?
Patron Accounting LLP supports companies across India with all aspects of Ind AS 105 compliance, classification, measurement, disclosures, and audit readiness. Our team brings deep experience advising listed companies and NBFCs on complex divestitures and restructuring transactions.
Our services include:
- Statutory Audit
- Ind AS Advisory
- Financial Reporting & Schedule III
- Disclosure Review
Schedule a 30-minute consultation with our Ind AS team, Pune · Mumbai · Delhi · Gurugram.
Frequently Asked Questions (FAQs)
Ind AS 105 is the Indian Accounting Standard that prescribes how entities must account for non-current assets classified as held for sale and how they must present discontinued operations in their financial statements. It ensures transparency around major disposals or closures by requiring specific recognition and disclosure rules.
An asset qualifies as ‘held for sale’ if its carrying amount will be recovered principally through a sale transaction rather than continuing use. The asset must be available for immediate sale in its present condition and the sale must be highly probable within one year per Para 7-8.
A discontinued operation is a component that has been disposed of or classified as held for sale and represents either a separate major line of business or geographical area. This definition ensures only significant disposals are presented distinctly in the financial statements.
The key differences are that only Ind AS 105 formalises ‘held-for-sale’ accounting with specific recognition criteria, requires single-line P&L presentation with detailed note disclosures, ceases depreciation upon classification, and aligns closely with IFRS 5 requirements, features not present in legacy Indian GAAP under AS 24.
If a subsidiary meets the ‘held-for-sale’ criteria, available for immediate sale with highly probable completion within one year, it is classified accordingly. If it constitutes a major line or geography, its results are presented as a discontinued operation per Para 32-33 in both standalone and consolidated accounts.
No. Once an asset is classified as held for sale under Ind AS 105 (Para 25), depreciation or amortisation ceases immediately. This prevents double-counting impairment losses since the asset’s recoverable value will be tested against fair value less costs to sell instead.
Single-line presentation means that the post-tax profit or loss from discontinued operations appears as one line item on the face of the statement of profit and loss. Detailed revenue, expenses, tax breakdowns are provided separately in notes per Para 33(b).
Earnings per share (EPS) from continuing operations must be presented separately from EPS relating to discontinued operations, either directly on the face of P&L or in notes, as mandated by both Ind AS 33 Earnings per Share and Ind AS 105 requirements.
Yes. When an operation is classified as discontinued during the current period, comparative figures must also be restated to reflect this treatment so users can compare ongoing performance consistently across periods per Para 34-35.
If ‘held-for-sale’ criteria are no longer met, for example if management abandons plans, the asset returns to its previous category (e.g., PPE). It is measured at the lower of its carrying amount before initial classification adjusted by notional depreciation/amortisation or its recoverable amount at reclassification date per Para 27.
About This Article
Reviewed by CA & CS Team · Patron Accounting LLP
Technical reviewer: CA Sundram Gupta, FCA
Last reviewed: 2026-05-02
Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Indian Accounting Standards) Rules, 2015, dated 16 February 2015) · IFRS Foundation