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Ram Ltd. holds 50% of Shyam Ltd. (JV). Ram plans to sell 10% to a third party; that 10% qualifies as held-for-sale under Ind AS 105. How is the retained 40% accounted DURING the held-for-sale period?
AThe retained 40% is derecognised pending the sale
BThe retained 40% continues to be accounted under equity method until the 10% sale completes; thereafter, depending on whether joint control is retained, the 40% is either at equity method or at Ind AS 109
CThe retained 40% is remeasured to FV immediately
DThe retained 40% is also classified as held-for-sale automatically
Answer & Solution
Correct answer: B. The retained 40% continues to be accounted under equity method until the 10% sale completes; thereafter, depending on whether joint control is retained, the 40% is either at equity method or at Ind AS 109
Ind AS 28 paragraph 20-21 mandates equity method for the retained portion until the held-for-sale portion is actually sold. Only after disposal does the classification of the retained portion (joint control retained → equity method; otherwise → Ind AS 109) crystallise.
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