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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Gagan Engineering Ltd. approved and announced a plan on 10 February 2026 to discontinue its Foundry division. Its financial year ends 31 March 2026. By 31 March 2026 the plan had been approved and announced, but the sale agreement was signed on 15 May 2026, before the financial statements were approved on 30 June 2026. Which treatment is correct under AS 24?

AS 24 disclosures are required in the 2025-26 financial statements. The initial disclosure event is the earlier of the board-approved announced plan on 10 February 2026 and the binding agreement on 15 May 2026, so it falls within the year. Completion of the sale later does not defer disclosure.

  1. ANo AS 24 disclosure is needed in FY 2025-26 because the sale was completed after the balance sheet date
  2. BAS 24 disclosures start only in FY 2026-27 because the agreement was signed then
  3. CAS 24 disclosures are required in FY 2025-26 financial statements because the initial disclosure event (announcement of the approved plan on 10 February 2026) occurred in that periodCorrect
  4. DDisclosure is made only as a note on adjusting events, with no separate AS 24 information

Explanation

The initial disclosure event is the earlier of the binding agreement (15 May 2026) and the board-approved announced plan (10 February 2026). The earlier is 10 February 2026, which falls in FY 2025-26, so AS 24 disclosures apply in those statements. Waiting for the agreement date or for completion of sale is incorrect because the standard uses the earlier event.

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