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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Banerjee Exports Ltd is disposing of its leather goods segment. Which of the following items must be disclosed in the financial statements for the period in which the initial disclosure event occurs, as required by AS 24?

The company must disclose the net cash flows attributable to the operating, investing and financing activities of the discontinuing operation. AS 24 prescribes this disclosure along with the description, revenue, expenses, pre-tax result, tax and asset and liability carrying amounts, but not buyer names, individual salaries or market capitalisation.

  1. AThe expected date by which the sale of the segment will be completed, together with the names of the prospective buyers
  2. BThe amount of net cash flows attributable to operating, investing and financing activities of the discontinuing operationCorrect
  3. CThe salary details of employees of the segment who will lose their jobs
  4. DThe market capitalisation of the company before and after the announcement

Explanation

AS 24 requires disclosure of, among other things, a description of the discontinuing operation, the business or geographical segment, the date and nature of the initial disclosure event, the timing of expected completion, the carrying amounts of total assets and liabilities, and the amounts of revenue, expenses, pre-tax profit or loss and related tax, along with net cash flows from operating, investing and financing activities. Names of buyers, individual salary details and market capitalisation are not required by the standard.

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