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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Meera Pharma Ltd has decided to discontinue its Veterinary division. Which of the following is a required disclosure in the financial statements for the period that includes the initial disclosure event, as per AS 24?

The enterprise must disclose the amounts of revenue and expenses from ordinary activities attributable to the discontinuing operation. AS 24 also requires pre-tax profit or loss, related tax expense, and carrying amounts of assets and liabilities to be disposed of, not just a net loss or a narrative.

  1. AOnly the net loss of the division for the year, without any split of revenue and expenses
  2. BThe amounts of revenue and expenses in respect of ordinary activities attributable to the discontinuing operationCorrect
  3. COnly a narrative description of the division, with no amounts
  4. DThe forecast profit of the buyer after acquiring the division

Explanation

AS 24 requires disclosure of the amounts of revenue and expenses in respect of ordinary activities attributable to the discontinuing operation, the pre-tax profit or loss and related income tax expense, and carrying amounts of total assets and liabilities to be disposed of. Option A is wrong because a bare net figure is insufficient; the standard requires the revenue and expense amounts. Option D is not required at all.

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