Oasis Limited runs a famous chain of super markets and restaurants. Restaurant division constitutes 35% of total group revenue. The management of…

CA Intermediate · Advanced Accounting · PYQS · May 2026
Oasis Limited runs a famous chain of super markets and restaurants. Restaurant division constitutes 35% of total group revenue. The management of the company decides to close the business of restaurants as the company has been experiencing declining profitability due to increased competition. On 1st April, 2025, the management announced its intention to discontinue the restaurant business and concentrate on Super market segment only. The decision was made through strategic review and the management started actively seeking buyers for the restaurant division. During the year 2025-26, the company has sold 5 restaurants out of 12 restaurants so far as part of the sale. Comment, whether it will be considered as discontinuing operation or not as per the provisions of AS-24?

Suggested Answer and Working Notes:

As per AS24, a discontinuing operation is a component of an enterprise: that the enterprise, pursuant to a single plan, is: disposing of substantially in its entirety, ordisposing of piecemeal, orterminating through abandonment; and which represents a separate major line of business or geographical area of operations. Hence the restaurant division's closure by Oasis Limited will be considered a discontinuing operation as per the provisions of AS 24. This is due to the fact that the assets are sold off as part of a single plan, and that the business represents a separate major line of business, and can be distinguished both operationally and for financial reporting purposes.

Topics: AS 24, AS 14

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