Skip to content

CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Nair Foods Ltd. is selling its dairy division under a binding agreement signed on 20 March 2026. The year-end is 31 March 2026, and the sale will complete on 30 June 2026. How should the company treat the dairy division in its financial statements for the year ended 31 March 2026 under AS 24?

The company must make AS 24 disclosures in the financial statements for the year ended 31 March 2026, because the binding sale agreement signed on 20 March 2026 is the initial disclosure event and it occurred before the year-end, regardless of completion in June.

  1. AMake AS 24 disclosures for the year ended 31 March 2026, since the initial disclosure event occurred before the year-endCorrect
  2. BMake no disclosure until the sale completes on 30 June 2026
  3. CDisclose only as an adjusting event after the balance sheet date and restate all earlier balances
  4. DDisclose only in the board's report, not in the financial statements

Explanation

The binding sale agreement on 20 March 2026 is the initial disclosure event and falls within the reporting period, so AS 24 disclosures are required in the financial statements for that year. Completion in June does not delay disclosure. Option C misapplies AS 4 adjusting-event treatment.

Did you get it right without looking?

One question tells you little. A timed set on AS 24 Discontinuing Operations shows your real accuracy, how long you take and where you lose marks.

Practise AS 24 Discontinuing OperationsFree diagnostic mock

More AS 24 Discontinuing Operations questions