Limitations / shortcomings in Reporting of Asset Held for Disposal


The Institute of Chartered Accountants of India (ICAI) has frequently observed discrepancies where financial reporting disclosures do not conform to statutory requirements or do not offer stakeholders a transparent depiction. Listed below are several identified deficiencies in reporting practices concerning Asset held for Disposal (Ind As 105):

Shortcomings: IND AS 105 “Asset held for Disposal”

S. No.Observation(s) Remarks
1.Company possessing assets held for sale are not presented separately in the financial statement.Paragraph 38 of IND AS 105 require that company shall distinctly segregate and present a non – current asset designated as held for sale, along with the assets of a disposal group categorised as held for sale, from other assets on the balance sheet.
2.Company has not specified the reasons for assets classified as held for sale.Para 30 of IND AS 105 mandates company to present and disclose information that allow users to assess the financial impact of non -current assets held for sale. Additionally, company shall disclose the following information in the note:
    a)   Description of assets held for sale.     b) Description of sale circumstances, i.e. manner and timing              of disposal.
3.Asset classified as held for sale continued to be presented at same value in the balance sheet over the years without any specified reason.Paragraph 15 of IND AS 105 outlines that a company shall measure the non- current assets held for sale or disposal group classified as held for sale at lower of its: Carrying amountFair value less costs to sell.
SW Remarks: Companies must comply with the statutory requirement outlined above to ensure precise reporting consistent with standards, enhancing transparency and credibility in their financial statements. 

Abhishek Prasad Audit Associate, SW