CA Inter Advanced Accounting Test: AS 24 Discontinuing Operations and AS 25 Interim Reporting

The note answers three questions on AS 24. The first explains that mere gradual phasing out of a product line does not by itself qualify as a discontinuing operation, listing the examples the standard gives that only count in combination with other circumstances. The second and third questions test how a board resolution to sell assets or transfer them to a new factory changes the position, and why a phased but time-bound closure plan, approved by the board, does bring AS 24 into effect. The answers are written in the structure examiners expect: state the definition or principle, apply it to the facts, then conclude.

Read each question first and attempt the answer before checking the model solution, since the marks split (6 and 8 marks) shows how much depth is expected. Compare your reasoning with the stepwise application to the facts, especially the points on board approval, a defined timeline and whether the new segment has started. For AS 25, check how the quarterly figures are adjusted for dividend income and deferred expenses, and note where the standard requires the same accounting policies as the annual statements. Practise writing the conclusions in full sentences.

This is meant for CA Inter students preparing Advanced Accounting, particularly those working on the AS 24 and AS 25 chapter after the basic framework of accounting standards. It suits students who find the difference between a strategic intention and a discontinuing operation confusing, and those preparing for descriptive questions in test series or the exam itself.

• AS 24 Discontinuing Operations definition
• Gradual phasing out of product lines
• Disposal by single plan or piecemeal
• Board approval and time-bound closure
• AS 25 Interim Financial Reporting
• Treatment of dividend income in interim results
• Deferral of sales promotion expenses in interim periods