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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Which of the following statements regarding presentation of a discontinuing operation under AS 24 is correct?

The correct statement is that pre-tax gain or loss on disposal and related tax must be disclosed, and prior period disclosures are restated to show the discontinuing operation separately. AS 24 permits disclosure in notes or on the face, and covers both sale and abandonment.

  1. ADisclosures about the discontinuing operation must be presented separately from continuing operations on the face of the statement of profit and loss only, never in notes
  2. BComparative information for prior periods need not be restated to separate the discontinuing operation
  3. CThe amount of pre-tax gain or loss on disposal of assets and the related income tax expense must be disclosed, and prior period disclosures are restated to present the discontinuing operation separatelyCorrect
  4. DA discontinuing operation can be an operation disposed of by the enterprise only through abandonment, not through sale

Explanation

AS 24 requires disclosure of the pre-tax gain or loss on disposal of assets or settlement of liabilities and the related tax. It also requires prior period comparatives to be restated so that disclosures for discontinuing operations relate to all operations discontinued by the balance sheet date of the latest period presented. The standard allows disclosure in notes or face, and discontinuance can occur by sale or abandonment.

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