Accounting Standard 24: AS 24 is applicable to all discontinuing operations. The objective of AS 24 is to establish principles for reporting information about discontinuing operations, thereby enhancing the ability of users of financial statements to make projections of an enterprise's cash flows, earnings-generating capacity, and financial position by segregating information about discontinuing operations from information about continuing operations.
Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations
The objective of Ind AS 105 is to specify the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. In particular, the Ind AS requires:
- (a) assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease;
- (b) assets that meet the criteria to be classified as held for sale to be presented separately in the balance sheet; and
- (c) the results of discontinued operations to be presented separately in the statement of profit and loss.
The Ind AS:
- (a) adopts the classification ‘held for sale’.
- (b) introduces the concept of a disposal group, being a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction.
- (c) classifies an operation as discontinued at the date the operation meets the criteria to be classified as held for sale or when the entity has disposed of the operation.
Difference Between AS 24 and Ind AS 105
|AS 24||Ind AS 105|
|AS 24 deals with the discontinuing operations only.||Ind AS 105 deals with discontinued operations, which are either disposed off or are held for sale.|
|Under AS 24, such detailed and separate guidance is not available. Such assets continue to be governed by AS 10, 26 and 28.||Ind AS 105 gives detailed guidance on treatment of non current assets or disposal groups, which are classified as “held for sale” or “held for distribution to owners”.|
|AS 24 specifies the initial disclosure event in respect of a discontinuing operation.||Ind AS 105 does not mention the initial disclosure event in respect to a discontinuing operation as it deals only with discontinued operations.|
|As per AS 24, the assets which are to be abandoned, are classified as “discontinuing operation”||Ind AS 105 specifically states that the assets, which are to be abandoned, should not be classified as held for sale.|
As per AS 24, a discontinuing operation is:
a component of an entity that represents the major line of business or geographical area, that can be distinguished operationally and for financial reporting purposes.
As per Ind AS 105, a discontinued operation is:
|AS 24 does not give any specific guidance regarding this aspect.||Ind AS 105 provides guidance on the accounting entries to be made in the books, when the enterprise changes its plan to sell the non current assets or disposal group, which are already classified as held for sale.|
|AS 24 does not specify any time period in this regard as it relates to discontinuing operations.||Ind AS 105 requires that the disposal of the assets should get completed within one year, subject to limited exceptions.|
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