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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Gupta Foods Ltd. discontinues its bakery division. For the year, the division had cash flows from operating activities of ₹(7) crore, investing activities of ₹3 crore and financing activities of ₹(2) crore. Under AS 24, what must the company disclose about these cash flows?

The company must disclose the net cash flows from operating (₹-7 crore), investing (₹3 crore) and financing (₹-2 crore) activities attributable to the bakery division separately, in the financial statements. A single net figure or a Board's report mention is insufficient under AS 24.

  1. AOnly the net cash flow of ₹(6) crore
  2. BNo cash flow disclosure, as AS 24 deals only with profit and loss items
  3. CNet cash flow attributable to the discontinuing operation, which is the sum of the three, shown only in the Board's report
  4. DThe cash flows from operating, investing and financing activities attributable to the discontinuing operation, shown separately, on the face of the financial statements or in notesCorrect

Explanation

AS 24 requires an enterprise that presents a cash flow statement to disclose the net cash flows attributable to operating, investing and financing activities of the discontinuing operation. These are to be shown separately, in the financial statements (face or notes), not merely in the Board's report. A single net figure of ₹(6) crore would not meet the requirement.

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