Page 8 - 11. COMPILER QB - INDAS 105

even then it is not for sale in its present condition and no conditions have been unexpectedly imposed. The

land will not be classified as held for sale until the rectification work is actually carried out.

Situation 3
The land in this case is available for immediate sale in its present condition and it would qualify to be

classified as held for sales since it is being marketed at reasonable price.

Q5 (Nov. 18 – 8 Marks)

PB Limited purchased a plastic bottle manufacturing plant for Rs24 lakh on 1st April, 2015. The useful life of
the plant is 8 years. On 30th September, 2017, PB Limited temporarily stops using the manufacturing plant

because demand has declined. However, the plant is maintained in a workable condition and it will be used in
future when demand picks up.

The accountant of PB Limited decided to treat the plant as held for sale until the demand picks up and
accordingly measures the plant at lower of carrying amount and fair value less cost to sell. The accountant

has also stopped charging depreciation for rest of the period considering the plant as held for sale. The fair
value less cost to sell on 30th September, 2017 and 31st March, 2018 was Rs13.5 lakh & Rs12 lakh

respectively.
The accountant has made the following working:

Carrying amount on initial classification as held for sale Rs Rs
Purchase price of Plant 24,00,000
Less: Accumulated Depreciation [(Rs24,00,000/8)x2.5 years] 7,50,000 16,50,000

Fair value less cost to sell as on 31st March, 2017 12,00,000
The value lower of the above two 12,00,000

Balance Sheet extracts as on 31st March, 2018

Particulars Rs
ASSETS
Current Assets

Other Current Assets
Assets classified as held for sale 12,00,000
Required:

Analyze whether the above accounting treatment is in compliance with the Ind AS. If not, advise the correct

treatment showing necessary workings.

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