AS 24 Discontinuing Operations: Recognition, Disclosure and Presentation

24 Discontinuing Operations explained: this guide covers what 24 Discontinuing Operations means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

AccountsMonthly reportAccounting & BookkeepingOutsource Accounting & BookkeepingMonthly accounting · GST reconciliation · Financial reportsAccurate BooksGST ReconciliationExpert TeamGet Started →

What Is AS 24?

Accounting Standard 24 (AS 24), titled "Discontinuing Operations," was issued by the ICAI and establishes principles for reporting information about discontinuing operations. It enhances the ability of users of financial statements to make projections of an enterprise's cash flows, earnings-generating capacity and financial position by segregating information about discontinuing operations from continuing operations.

Key Definitions

Discontinuing Operation

A discontinuing operation is a component of an enterprise that the enterprise, pursuant to a single plan, is:

• Disposing of substantially in its entirety (e.g., selling a business segment), or
• Disposing of piecemeal (e.g., selling the assets and settling the liabilities individually), or
• Terminating through abandonment

A discontinuing operation represents a separate major line of business or geographical area of operations that can be distinguished operationally and for financial reporting purposes.

Initial Disclosure Event

The initial disclosure event for a discontinuing operation is the occurrence of one of the following (whichever occurs earlier):

1. The enterprise has entered into a binding sale agreement for substantially all of the assets of the discontinuing operation
2. The enterprise's board of directors (or similar governing body) has both approved and announced a detailed, formal plan for the discontinuance

Recognition and Measurement

AS 24 does not establish new recognition or measurement principles. Instead, it requires that existing recognition and measurement principles from other accounting standards be applied to the discontinuing operation. Specifically:

• Assets of the discontinuing operation are measured under relevant standards (AS 2 for inventory, AS 10 for PPE, AS 28 for impairment)
• Provisions for costs of discontinuance are recognised under AS 29 (Provisions, Contingent Liabilities and Contingent Assets)
• Gains and losses on disposal of assets are recognised under the relevant asset standards

Disclosure Requirements

Initial Disclosure

At the time of the initial disclosure event, the enterprise should disclose:

1. A description of the discontinuing operation
2. The business or geographical segment in which it is reported
3. The date and nature of the initial disclosure event
4. The expected date or period of completion of the discontinuance
5. The carrying amounts of total assets and total liabilities to be disposed of
6. The amounts of revenue, expenses and pre-tax profit or loss from ordinary activities attributable to the discontinuing operation during the current reporting period
7. The net cash flows attributable to the operating, investing and financing activities of the discontinuing operation during the current period

Updating the Disclosures

In subsequent financial statements, the enterprise should update the disclosures, including:

• Any significant changes in the amount or timing of cash flows
• Events causing changes in the plan
• If the plan is abandoned, that fact and its effect

Continuing Disclosure

Until the discontinuance is complete, each reporting period should disclose:

• Revenue, expenses and pre-tax profit or loss from the discontinuing operation
• Net cash flows from operating, investing and financing activities
• Gains or losses on disposal of assets or settlement of liabilities

Presentation

AS 24 requires the disclosures to be presented either:

• On the face of the financial statements, or
• In the notes to the financial statements

The disclosure should distinguish between discontinuing and continuing operations. The amounts disclosed should be presented for each discontinuing operation separately, not aggregated.

Practical Example

ABC Ltd. operates in three business segments: FMCG, Textiles, and Real Estate. On 15 January 2026, the board approves and announces a plan to discontinue the Textiles segment by selling all textile manufacturing plants and settling related liabilities.

In the financial statements for FY 2025-26, ABC Ltd. must disclose:

• Description of the Textiles discontinuing operation
• Board approval date (15 January 2026) as the initial disclosure event
• Expected completion date
• Carrying amounts of textile segment assets and liabilities
• Revenue, expenses and profit/loss of the textile segment for the year
• Cash flows from the textile segment

Conclusion

AS 24 ensures transparency when an enterprise is winding down a significant business segment or geographical area. By requiring detailed disclosure from the initial decision through completion, the standard helps investors and analysts separate the financial performance of continuing operations from discontinuing ones, enabling better-informed decisions.

At TaxClue, our team of qualified CAs assists businesses with discontinuing operation disclosures, segment analysis, and compliance with accounting standards. Contact us for expert assistance.