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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Mahalaxmi Foods Ltd. approved a plan in December 2025 to discontinue its bakery business. In its financial statements for the year ended 31 March 2026, which of the following is required by AS 24 regarding presentation of the discontinuing operation?

AS 24 requires the discontinuing operation's information to be disclosed separately from continuing operations in the financial statements, with prior period comparatives restated for those disclosures. It is not treated as an extraordinary item, and disclosure only in the Directors' Report would not satisfy the standard.

  1. APrepare the disclosures only in the Directors' Report, not in financial statements
  2. BShow the discontinuing operation's results as an extraordinary item in the statement of profit and loss
  3. CDisclose the required information in the notes or face of the financial statements, separately from continuing operations, and restate prior period comparatives for the same disclosuresCorrect
  4. DEliminate prior year comparatives of the bakery business because the segment is being closed

Explanation

AS 24 requires specified disclosures about the discontinuing operation separately from continuing operations, and requires comparative information for prior periods to be restated to present the discontinuing operation's disclosures. It does not treat discontinuance as extraordinary, nor is the Directors' Report a substitute. Comparatives are not dropped.

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