Classify on evidence, then measure in the correct order
Under Ind AS 105, paragraphs 6–9, an asset is held for sale when recovery is principally through sale, it is immediately available for sale in its present condition on usual terms and the sale is highly probable. A management wish to sell, a distant disposal plan or temporary idleness is insufficient. The sale plan needs the appropriate commitment, active buyer-search and marketing steps, a reasonable price and the required completion expectation.
This article uses the ICAI official Ind AS compendium and the notified standard text, checked on 23 October 2026. It focuses on individual cost-model non-current assets within the standard’s measurement scope. It is separate from an AS 24 discontinuing-operation announcement or a Schedule III disclosure exercise. The examples exclude revaluation accounting, tax, discounting and disposal-group allocation complications unless stated.
Keep the classification date separate from the expected sale date
Paragraph 8 ordinarily expects completion within one year from classification. Paragraph 9 and Appendix B permit specified beyond-control delays with evidence of continuing commitment; one year is not a licence to leave every unsold asset indefinitely classified. Consider required shareholder approval when assessing probability. Prepare a dated evidence file rather than selecting the reporting date simply because it is convenient.
Paragraph 12 prevents held-for-sale classification at a reporting date where the criteria were met only afterwards, even if before financial-statement approval. The specified note disclosures may then be required. An abandoned asset is not automatically held for sale: paragraph 13 distinguishes abandonment from recovery through sale. An asset taken temporarily out of use is also not thereby abandoned.
Measure immediately before and after classification
Paragraph 18 first requires measurement under the asset’s applicable Ind AS immediately before classification. That includes required depreciation and impairment up to that date. Paragraph 15 then applies the lower of the resulting carrying amount and fair value less costs to sell. Do not start with a stale book balance or skip the selling-cost deduction because the buyer’s price estimate looks close to carrying value.
Costs to sell are incremental costs directly attributable to disposal, excluding finance costs and income tax expense. Budgeting for all future operating losses or all head-office overheads does not make those amounts selling costs. Where the sale is expected beyond one year and the classification exception applies, paragraph 17 has a present-value requirement for selling costs; the straightforward examples below assume that complication does not arise.
Depreciation stops; other accounting does not stop
Paragraph 25 prohibits depreciation or amortisation of the covered non-current asset while classified as held for sale. It does not freeze the fair-value-less-costs-to-sell assessment or permit cessation before the classification criteria were met. The paragraph also continues recognition of interest and other expenses attributable to disposal-group liabilities; held-for-sale presentation is not a general suspension of expenses.
Paragraph 5 has measurement exceptions for specified assets. Do not apply the individual-asset haircut mechanically to every asset in a disposal group: relevant items continue to follow their own measurement standards, with the group-level process applied in the prescribed order. This guide’s figures concern assets expressly assumed to fall within Ind AS 105’s measurement rules.
A later price recovery is not an unrestricted revaluation
Paragraph 21 limits a subsequent increase for an individual asset to cumulative impairment recognised under Ind AS 105 or previously under Ind AS 36. Retain the opening impairment history, classification write-down and subsequent reversals. Comparing only today’s valuation with yesterday’s amount can overstate the gain, particularly where a proposed sale price is above the pre-impairment book amount.
A return to use has its own lower-of calculation
When the sale criteria cease to be met, paragraph 27 measures the asset at the lower of its carrying amount before held-for-sale classification adjusted for depreciation, amortisation or revaluations that would otherwise have occurred, and recoverable amount at the decision date. This hypothetical depreciation does not mean routine depreciation should have been booked during the held-for-sale period; it is part of the return-to-use measurement.
Apply the resulting adjustment under paragraph 28, including the appropriate treatment for any revaluation-history exception. Resume the applicable asset-standard process using the supported revised carrying amount and remaining useful life. The original sale intention does not justify restoring the original unadjusted amount.
Finally, held-for-sale asset presentation and discontinued-operation presentation are separate assessments. Paragraph 38 requires the relevant separate balance-sheet presentation; paragraph 32 defines the narrower discontinued-operation population. Sale of one ordinary machine is not automatically a separately presented discontinued business.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Deduct incremental selling costs at classification
Immediately before an eligible classification, a machine’s carrying amount, correctly measured under the applicable standard, is ₹40,00,000. Fair value is ₹38,00,000 and qualifying incremental selling costs ₹2,00,000. Fair value less costs to sell = ₹36,00,000. New carrying amount = min(₹40,00,000, ₹36,00,000) = ₹36,00,000; write-down = ₹4,00,000. Comparing ₹40 lakh only with the ₹38 lakh price would miss ₹2 lakh of required reduction.
Illustrative example 2: An initial higher valuation does not create a gain
Another covered asset has a properly measured carrying amount of ₹40,00,000. Fair value is ₹47,00,000 and selling costs ₹2,00,000, giving ₹45,00,000 net. At initial held-for-sale measurement it stays at ₹40,00,000, with no ₹5,00,000 upward revaluation. Classification applies a lower-of measurement, not an automatic sale-price marking-up exercise.
Illustrative example 3: Cap a subsequent recovery by actual impairment history
An asset was reduced from ₹40,00,000 to ₹36,00,000 on classification, with no earlier impairment. Later fair value less costs to sell rises to ₹42,00,000. The apparent increase over ₹36,00,000 is ₹6,00,000, but cumulative impairment is only ₹4,00,000. Recognised recovery is capped at ₹4,00,000, so carrying amount becomes ₹40,00,000, not ₹42,00,000.
Illustrative example 4: Earlier Ind AS 36 impairment is part of the history
Assume a covered cost-model asset had a ₹50,00,000 carrying amount before a valid ₹8,00,000 Ind AS 36 impairment, leaving ₹42,00,000. It is then classified as held for sale and reduced by another ₹4,00,000 to ₹38,00,000. Subsequently its net sale value rises to ₹46,00,000. The ₹8,00,000 increase is within cumulative impairment ₹12,00,000, so the paragraph 21 cap permits that recovery on the stated facts, producing ₹46,00,000. There are no other movements or previously recognised reversals in this illustration.
Illustrative example 5: Sale abandoned: compare hypothetical use and recoverable amount
An asset had ₹30,00,000 carrying amount immediately before classification on 1 October and was written down to ₹26,00,000. At 31 March the sale plan ceases to qualify. Had it remained in use, assumed straight-line annual depreciation of ₹6,00,000 would have reduced the original ₹30,00,000 by ₹3,00,000 over six months, to ₹27,00,000. Recoverable amount at the decision date is ₹25,00,000. Return-to-use amount = min(₹27,00,000, ₹25,00,000) = ₹25,00,000; reduction from the held-for-sale balance is ₹1,00,000.
Illustrative example 6: Depreciate up to classification, not through the sale period
At 1 April a covered asset has carrying amount ₹36,00,000 and annual straight-line depreciation ₹6,00,000. It first meets held-for-sale criteria on 1 October. Under the assumed monthly convention, six-month depreciation is ₹3,00,000, leaving ₹33,00,000. Net sale value then is ₹34,00,000, so held-for-sale value is ₹33,00,000. With no later valuation movement and continued qualification, no depreciation is booked for October–March. Closing value is ₹33,00,000, not the ₹30,00,000 from depreciating it for the full year.
Illustrative example 7: Criteria met only after the reporting date
At 31 March, the appropriate asset-standard working supports ₹24,00,000 carrying amount and no impairment. The held-for-sale criteria are first met on 10 April before statement approval; at that later date net sale value is ₹21,00,000. Paragraph 12 does not allow retrospective held-for-sale classification at 31 March. An erroneous March held-for-sale haircut would reduce ₹24,00,000 to ₹21,00,000, a ₹3,00,000 error. Assess the paragraph 12 disclosures and the subsequent-period accounting separately; the facts expressly assume no independent March impairment.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm the applicable framework and measurement scope. | Ind AS applicability, asset class and paragraph 5 assessment. |
| 2 | Document recovery principally by sale. | Approved disposal plan and intended recovery evidence. |
| 3 | Test immediate availability and high probability. | Readiness, buyer-search, marketing and pricing records. |
| 4 | Fix the date on which all classification criteria are met. | Dated approval/action chronology and reporting-date comparison. |
| 5 | Assess completion within one year or a valid exception. | Sale timetable and paragraph 9/Appendix B evidence. |
| 6 | Measure under the previous asset standard first. | Depreciation and impairment through classification date. |
| 7 | Calculate fair value less qualifying selling costs. | Valuation, incremental-cost schedule and any discounting. |
| 8 | Maintain the impairment and recovery history. | Ind AS 36/105 losses, reversals and paragraph 21 cap. |
| 9 | Review continued classification and any return-to-use amount. | Current sale evidence, hypothetical-use carrying amount and recoverable amount. |
| 10 | Reconcile separate presentation and disclosures. | Balance-sheet classification, discontinued-operation assessment and notes. |
Sixteen practitioner FAQs
1. Is a Board intention to sell enough?
No. Immediate availability and a highly probable sale need the evidence required by paragraphs 7–8.
2. Must the buyer already have paid?
No, but the classification criteria must be met. A vague prospect of a buyer is not equivalent to an active qualifying sale plan.
3. Is the one-year expectation measured only from year-end?
Paragraph 8 refers to the date of classification, so retain that date and the relevant completion expectation.
4. Can every delay beyond one year be ignored?
No. Paragraph 9 and Appendix B require the specified circumstances and evidence of continuing commitment.
5. Does temporary idleness mean abandonment or held for sale?
No. Those are distinct facts and assessments; paragraph 14 rejects automatic abandonment treatment for temporary non-use.
6. Can criteria met in April change the preceding March classification?
Paragraph 12 prevents that retrospective held-for-sale classification where the criteria were met only after the reporting period.
7. What measurement comes immediately before classification?
Measure the asset under its applicable Ind AS, including required depreciation and impairment through that date.
8. Is fair value alone the comparison figure?
No. Paragraph 15 uses fair value less costs to sell.
9. Do financing costs and income tax count as selling costs?
The defined costs to sell exclude finance costs and income tax expense; assess incremental disposal costs properly.
10. Does a high initial sale price permit an upward gain?
Not under the initial lower-of rule merely because net sale value exceeds carrying amount.
11. When does depreciation stop?
While the covered asset is classified as held for sale, not simply when management begins considering disposal.
12. Does held-for-sale classification suspend every expense?
No. The standard does not create a general expense holiday; paragraph 25 expressly continues relevant liability-related expenses.
13. What limits a subsequent valuation recovery?
For an individual asset, paragraph 21 caps the gain by the cumulative qualifying impairment history under Ind AS 105 and earlier Ind AS 36.
14. Do all assets in a disposal group follow this same individual measurement?
No. Paragraph 5 exceptions and the group-measurement sequence must be assessed for the particular assets and liabilities.
15. Can an asset returning to use be restored to its old unadjusted value?
No. Apply paragraph 27’s lower-of hypothetical-use carrying amount and recoverable amount.
16. Is sale of one machine automatically a discontinued operation?
No. The discontinued-operation criteria in paragraph 32 are distinct from held-for-sale classification of an individual asset.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assureFinancials or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
The classification date controls the accounting sequence. Preserve pre-classification measurement, net sale-value evidence and impairment history, then reassess both the sale plan and any return-to-use measurement before finalising the statements.