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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Tanvi Foods Ltd has a discontinuing operation. Which item must AS 24 require the company to disclose in its financial statements from the initial disclosure event onwards?

The company must disclose the pre-tax profit or loss of the discontinuing operation with related income tax expense, and the carrying amounts of total assets and liabilities to be disposed of. AS 24 requires quantified information along with description, segment and timing of the initial disclosure event.

  1. AOnly the name of the buyer of the operation
  2. BThe amounts of pre-tax profit or loss of the operation and income tax expense related thereto, along with the carrying amounts of its total assets and total liabilitiesCorrect
  3. CThe expected profit of the buyer after acquisition
  4. DOnly a note that the operation will be sold, without any amounts

Explanation

AS 24 requires a description of the operation, the business or geographical segment, the date and nature of the initial disclosure event, the timing of expected completion, the carrying amounts of total assets and liabilities to be disposed of, and the revenue, expenses, pre-tax profit or loss and related tax. So amounts of profit or loss with tax and the asset and liability carrying amounts are mandatory. The other options are not required.

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