Company X has identified one of its division (disposal group) to be sold to a prospective buyer and the Board has approved the plan to sell the…

Paragraph 15 of Ind AS 105 states that an entity shall measure a non-current asset (or disposal group) classified as held for sale at the lower of its carrying amount and fair value less costs to sell.Further, paragraph 17 of Ind AS 105 states that when the sale is expected to occur beyond one year, the entity shall measure the costs to sell at their present value. Any increase in the present value of the costs to sell that arises from the passage of time shall be presented in profit or loss as a financing cost.Company X has identified a disposal group and is committed to sell the same. The sale is expected to be completed after a period of one year hence, it will measure the costs to sell such disposal group at present value as per paragraph 17 of Ind AS 105.A. On 30th September, 20X1The disposal group will be measured at fair value less costs to sell which will be as follows:Fair value: ₹ 400.00 croresPV of costs to sell: (₹ 8.67 crores) (10 crores x 0.867)Total: ₹391.33 croresB. On 31st March, 20X2The disposal group will be measured at fair value less costs to sell which will be as follows:Fair value: ₹ 400.00 croresPV of costs to sell: (₹9.09 crores) (10 x 0.909)Total: ₹390.91 croresThe increase in costs to sell the division by ₹0.42 crore (₹9.09 crores - ₹8.67 crores) will be recognised in profit and loss as financing cost in accordance with paragraph 17 of Ind AS 105.