Direct answer: AS 24 requires separate information about a qualifying discontinuing operation from the period of its initial disclosure event. A routine asset sale or branch closure does not automatically qualify. The standard governs reporting and disclosure; recognition and measurement continue under the other applicable Accounting Standards.
Checked on 23 October 2026 against ICAI’s AS 24, Discontinuing Operations. This guide applies where the AS framework and AS 24 are applicable to the entity. It is not an Ind AS 105 held-for-sale calculation. The standard notes that it is not mandatory for Level III and Level IV non-company entities; check the entity’s actual framework before applying the disclosure format.
First establish a qualifying operation and the trigger date
The definition requires a component being disposed of or abandoned under a single plan, representing a separate major business line or geographical area, and distinguishable operationally and for financial reporting. A small facility rationalisation within an otherwise continuing business may not satisfy those tests. Prepare the scope conclusion before splitting numbers in the statements.
The initial disclosure event is the earlier of a binding agreement for substantially all attributable assets or the governing body’s approval of a detailed formal discontinuance plan together with its announcement. A discussion, a budget line or board approval without the necessary announcement should not be assumed to satisfy the second limb.
Build a reconciliation that can be reproduced
Use separate schedules for assets and liabilities, revenue and expenses, recognised disposal gains or losses, and cash flows. Tag the source balances by operation and period. Do not replace the required total asset and liability figures with only one net number: a useful net-assets bridge is additional reconciliation.
Attribution is not a device for shifting ordinary head-office costs away from continuing operations. Paragraph 21 links attribution to amounts that will be disposed of, settled, reduced or eliminated on completion. Keep continuing staff costs and retained obligations in the proper population, with evidence for genuine attributable amounts.
| Schedule | Practical reconciliation | Common exception |
|---|---|---|
| Assets and liabilities | Separate gross amounts and supporting net-assets bridge | Only a net number disclosed. |
| Period performance | Revenue, attributable costs, pre-tax result and related tax | Continuing costs shifted to improve continuing profit. |
| Cash flows and comparatives | Separate activity categories and prior-period segregation | Prior year omitted or all cash flows collapsed into one number. |
Keep disclosure separate from recognition
AS 24 does not make every future closure estimate a recognised liability or permit a chosen sale price to replace every carrying amount. Apply the relevant recognition and measurement standards, then present the resulting figures. Separate forecast proceeds, recognised amounts and cash actually received.
Paragraph 32 requires the discontinuing operation’s ordinary pre-tax result and related income-tax expense, and recognised pre-tax disposal gains or losses, on the face of profit and loss. Other required information is generally in the notes. Cash-flow requirements apply where the enterprise prepares and presents a cash-flow statement.
Comparatives, later developments and completion
Under paragraph 34, presented prior-period comparative information is segregated between continuing and discontinuing operations after the initial disclosure event. This reporting re-presentation does not itself change the prior period’s total profit. Reconcile the retained total and explain source-data allocations rather than changing previous recognition solely because the disposal plan is new.
Update significant changes in expected amounts and timing. Disclosures continue through the period in which the plan is substantially completed or abandoned, even where buyer payments remain outstanding. Withdrawal of a previously reported plan needs disclosure and a separate review of affected recognised amounts. Events between balance-sheet date and approval require the relevant AS 4 analysis, rather than automatic backdating of the trigger.
All six examples use fictional rupee amounts and assume a component meeting AS 24’s definition and a valid initial disclosure event, except where discussing timing. Tax expense is an expressly assumed independently supported input, not an implied Indian statutory rate. Disposal recognition is also assumed already established under the applicable standards.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Show gross assets and liabilities, with a net bridge
The qualifying operation has PPE of ₹50,00,000, inventory of ₹12,00,000 and receivables of ₹8,00,000. Attributable assets total ₹70,00,000. Trade liabilities of ₹9,00,000 and attributable borrowing of ₹16,00,000 total ₹25,00,000. Net assets are ₹45,00,000. Retain the ₹70,00,000 and ₹25,00,000 separate totals rather than disclosing only ₹45,00,000.
Illustrative example 2: Keep continuing costs out of the discontinuing result
Revenue is ₹1,20,00,000. Costs that satisfy attribution are operating expenses ₹90,00,000, depreciation ₹5,00,000 and attributable interest ₹3,00,000, producing pre-tax profit of ₹22,00,000. An additional ₹4,00,000 head-office salary will continue unchanged after disposal and is not attributable on these facts. Charging it to the operation would understate its result by ₹4,00,000, at ₹18,00,000.
Illustrative example 3: Separate a recognised disposal result from later cash
An asset disposal is properly recognised for gross consideration ₹18,00,000 with direct disposal costs ₹1,00,000 and carrying amount ₹14,00,000. Net consideration is ₹17,00,000 and recognised pre-tax gain ₹3,00,000. Only ₹10,00,000 of gross consideration is received immediately, leaving ₹8,00,000 receivable. Do not substitute the initial cash receipt for the assumed recognised consideration.
Illustrative example 4: Attribute related tax using supported inputs
The operation’s supported ordinary pre-tax result is ₹22,00,000 and its related tax expense, computed separately under applicable requirements, is assumed to be ₹5,50,000. Ordinary after-tax result is ₹16,50,000. A separately recognised disposal gain of ₹3,00,000 has separately supported related tax expense of ₹75,000, leaving ₹2,25,000 after tax. Combined after-tax contribution is ₹18,75,000, while the ordinary result and disposal gain remain separately traceable.
Illustrative example 5: Preserve cash-flow categories
The operation’s supported net operating inflow is ₹9,00,000, investing inflow ₹17,00,000 and financing outflow ₹6,00,000. Aggregate net movement is ₹20,00,000. For an entity preparing a cash-flow statement, the three activity amounts remain separately identified; showing only ₹20,00,000 would lose the category information needed for the AS 24 disclosure.
Illustrative example 6: Segregate prior-year comparatives without altering the total
Prior-year total revenue was ₹2,00,00,000, including ₹60,00,000 attributable to the now-discontinuing operation. Presented comparative revenue becomes ₹1,40,00,000 continuing and ₹60,00,000 discontinuing, still totalling ₹2,00,00,000. Prior-year pre-tax profit of ₹30,00,000, including ₹8,00,000 attributable profit, is segregated into ₹22,00,000 and ₹8,00,000. The total remains ₹30,00,000; this presentation exercise is not a new ₹8,00,000 prior-year loss.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm AS framework and AS 24 applicability. | Entity classification and applicable accounting framework. |
| 2 | Test the component against all definition limbs. | Single plan, major line/area and distinguishability analysis. |
| 3 | Document the initial disclosure event and date. | Binding agreement or approved and announced detailed plan. |
| 4 | Reconcile gross attributable assets and liabilities. | Ledger mapping, carrying amounts and net-assets bridge. |
| 5 | Validate revenue and cost attribution. | Source schedules and continuing-cost exceptions. |
| 6 | Apply other standards to recognition and measurement. | Impairment, obligation and disposal recognition workings. |
| 7 | Present ordinary result, related tax and recognised disposal gains appropriately. | Profit-and-loss face/notes mapping and tax support. |
| 8 | Reconcile cash-flow activity categories where applicable. | Operating, investing and financing schedules. |
| 9 | Segregate presented prior-period comparatives. | Re-presentation bridge preserving total recognised amounts. |
| 10 | Update changes, completion, withdrawal and subsequent events. | Current plan status, receipt forecasts and AS 4/AS 25 review. |
Sixteen practitioner FAQs
1. Does selling one machine automatically create a discontinuing operation?
No. Test the complete AS 24 definition, including a separate major business line or geographical area and a single plan.
2. Can a piecemeal disposal qualify?
It can, where the disposals form the qualifying coordinated plan rather than unrelated asset sales.
3. Does a board discussion trigger the disclosures?
Do not assume that. Establish the binding-sale limb or both approval of a detailed formal plan and its qualifying announcement.
4. Must cash be received before the initial disclosure event?
No. The trigger tests are not simply a cash-receipt test.
5. Does AS 24 itself prescribe the asset write-down amount?
No. Recognition and measurement are governed by the other applicable Accounting Standards.
6. Can every future closure cost be booked immediately?
No. Apply the relevant obligation and recognition requirements independently of the disclosure classification.
7. Should only net assets be disclosed?
Keep the required separate total assets and liabilities. A net-assets bridge is useful but does not replace those totals.
8. Can continuing head-office salaries be allocated to improve continuing profit?
Not merely for presentation convenience. Apply the attribution criteria to amounts that will actually be eliminated, reduced, settled or disposed of.
9. Are recognised disposal gains the same as cash collected?
No. Reconcile recognised consideration, carrying amount, costs, receivables and actual receipts separately.
10. Where is the ordinary pre-tax result presented?
Paragraph 32 requires it and its related income-tax expense on the face of profit and loss.
11. Where is a recognised pre-tax disposal gain shown?
Paragraph 32 also requires the relevant recognised pre-tax disposal gain or loss on the face of profit and loss.
12. Are cash-flow disclosures needed if the entity does not prepare a cash-flow statement?
The standard makes its cash-flow requirements applicable where the enterprise prepares and presents that statement.
13. Do comparative totals change because an operation is now discontinuing?
Segregation does not itself alter the prior-period total recognised result. Preserve and reconcile that total.
14. Can disclosure stop before all buyer instalments are collected?
Completion concerns substantial completion or abandonment of the plan; full buyer payment need not already have occurred.
15. What if the disposal plan is withdrawn?
Disclose the withdrawal, reasons and effects, and assess affected recognised amounts under the applicable standards.
16. Is this the Ind AS 105 held-for-sale model?
No. This article addresses AS 24 under the AS framework; establish the correct framework before selecting the treatment.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assureFinancials or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
Establish the qualifying component and disclosure trigger before splitting the numbers. Reconcile attributable amounts and comparatives while leaving recognition and measurement to the relevant standards.