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Mumbai Challengers Ltd. has playing-registration intangibles. Some registrations are about to be sold (transfer agreed before year-end) with proceeds ₹175 cr vs net book value ₹49 cr. Under Ind AS, these registrations should be:
AClassified as HELD FOR SALE under Ind AS 105 — but only where unconditional offers have been received before the reporting date; measure at lower of carrying amount and FV less costs to sell
BDerecognise immediately and recognise the entire ₹126 cr profit prior to year-end
CRecognised as revenue at ₹175 cr in the current year's profit & loss
DContinue as intangible assets at carrying amount ₹49 cr; recognise gain on actual disposal in the next year
Answer & Solution
Correct answer: A. Classified as HELD FOR SALE under Ind AS 105 — but only where unconditional offers have been received before the reporting date; measure at lower of carrying amount and FV less costs to sell
Held-for-sale classification requires the sale to be HIGHLY PROBABLE. For player registrations, prudent practice is to classify only those with unconditional offers received before reporting date. Once classified, measured at lower of carrying amount and FV less costs to sell. The sale itself is a non-adjusting event under Ind AS 10 — the post-balance-sheet ₹175 cr sale is disclosed but doesn't change pre-classified carrying amounts.
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