AS 24 Discontinuing Operations: A Practitioner Guide for FY 2026-27
AS 24 (Discontinuing Operations) is the Indian Accounting Standard that prescribes how an enterprise must identify and disclose discontinuing operations, major business lines or geographic areas being discontinued, within its financial statements.
The Institute of Chartered Accountants of India (ICAI) issued AS 24 under the Companies (Accounting Standards) Rules, 2006, reaffirmed in the Companies (Accounting Standards) Rules, 2021. It became mandatory for Level I enterprises from 1 April 2004. The standard replaced the earlier ICAI guidance issued in February 2002.
For FY 2026-27, AS 24 remains highly relevant to mid-market manufacturing and family business groups rationalising their portfolios. In our audit practice we frequently observe that AS 24 is easier to apply than Ind AS 105 but provides less analytical clarity.
AS 24 at a Glance
AS 24 sets out the principles for identifying and disclosing discontinuing operations, major business lines or geographic segments that are being disposed of or abandoned. Its primary users are Level I enterprises within the Indian Accounting Standards (AS) framework.
| Field | Value |
|---|---|
| Standard Number | AS 24 |
| Full Name | Discontinuing Operations |
| Issuing Body | ICAI (Accounting Standards Board) |
| Notified By | MCA, Companies (Accounting Standards) Rules, 2006 (reaffirmed in Companies (Accounting Standards) Rules, 2021) |
| Effective Date | 1 April 2004 for Level I enterprises |
| Supersedes | ICAI Accounting Standard issued in February 2002 |
| Equivalent Standard | AS 24 ↔ Ind AS 105 ↔ IFRS 5 |
| Applies To | Mandatory for Level I enterprises preparing financial statements under the Accounting Standards framework. Recommended for Level II and III. Ind AS-applicable companies follow Ind AS 105 instead. |
What is AS 24: Discontinuing Operations?
AS 24 is the Indian Accounting Standard that requires an enterprise to separately disclose information about discontinuing operations, components representing a major line of business or geographical area that are being disposed of or terminated under a single coordinated plan.
ICAI introduced this standard to address gaps in reporting major business disposals and restructurings before IFRS convergence. The predecessor guidance was less prescriptive and did not require detailed disclosure by component. Convergence with IFRS led to alignment with international best practices through Ind AS/IFRS equivalents.
Practising statutory auditors, CFOs of Level I companies under the legacy Indian GAAP framework, and CA students preparing for exams use this standard most frequently.
Objective of AS 24
The objectives of AS 24 are:
- Establish principles for reporting information about discontinuing operations to enable users to make better projections of an enterprise's cash flows, earnings-generating capacity, and financial position.
- Distinguish a discontinuing operation from other components of the enterprise and require their separate presentation.
- Specify minimum disclosures and the period in which they must be made.
By ensuring clear identification and separate disclosure of discontinuing operations, the standard helps users assess future prospects more accurately. This supports a true and fair view as required by Section 129 of the Companies Act, 2013.
Who Must Apply AS 24?
Entities covered
AS 24 applies as follows:
| Entity Type | Applicability |
|---|---|
| Level I Enterprises | Mandatory |
| Level II Enterprises | Recommended |
| Level III Enterprises | Recommended |
| Ind AS-applicable Cos | Not applicable, Ind AS 105 applies |
Level I covers large listed entities and public interest companies as per ICAI criteria. Smaller entities may voluntarily comply but are not compelled by law.
Scope exclusions
The following are excluded from the scope of AS 24:
- Held-for-sale concept (covered comprehensively under Ind AS 105 only).
- Asset disposals not constituting a discontinuing operation.
When the standard does not apply
If an entity classifies assets as held-for-sale or ceases depreciation based on held-for-sale status, it must apply Ind AS 105 instead. Isolated asset disposals that do not represent a separate major line or geography do not trigger disclosure under this standard; these fall under regular asset standards such as AS 10 Property Plant & Equipment or impairment testing under AS 28 Impairment of Assets.
Key Definitions under AS 24
| Term | Definition |
|---|---|
| Discontinuing operation | Component disposed/abandoned/terminated via single plan; major line/geography; separable |
| Initial disclosure event | Earlier of binding sale agreement or board-approved announced formal plan |
| Component of an enterprise | Distinct operations/cash flows separable from rest |
| Single plan | Coordinated programme to dispose/terminate operation |
| Major line/geographical area | Major component vs changes within existing line |
Recognition and Measurement under AS 24
When to recognise
Under Para 14 of AS 24, an entity must begin disclosing a discontinuing operation at the 'initial disclosure event'. This event occurs at whichever is earlier:
The date when a binding sale agreement covering substantially all assets is entered into.
The date when the board approves and publicly announces a detailed formal plan to discontinue.
From this point forward until completion or abandonment of discontinuance plans, all required disclosures must be made in each reporting period.
Initial Disclosure Event = Earlier of:
- Binding sale agreement date
- Board approval + public announcement date
Initial measurement
AS 24 does not introduce new measurement rules for assets or liabilities associated with discontinuing operations. Instead:
Assets continue to be measured per their respective standards:
- PPE per [AS 10]
- Intangibles per relevant standards
- Impairment testing per [AS 28]
Liabilities such as restructuring provisions are recognised per their own standards (AS 29 Provisions).
No reclassification as 'held-for-sale' occurs; depreciation/amortisation continues normally until actual disposal.
No single-line re-presentation on face of P&L is required; results are disclosed separately in notes only.
Subsequent measurement
After initial disclosure:
Continue applying existing measurement bases for all assets/liabilities.
Disclosure obligations persist until:
- The operation is completely discontinued/disposed
- Or plans are formally abandoned
Comparative period results are *not* restated separately for discontinuing operations (Para 31). This contrasts with Ind AS 105/IFRS 5 where comparatives are restated.
Pre-tax profit/loss from ordinary activities relating to the discontinuing operation must be disclosed distinctly within notes but typically remains part of continuing operations on P&L face.
Gains/losses on disposal are recognised when realised, not at announcement date, and disclosed pre-tax.
Cash flows attributable to the discontinuing operation must be disclosed separately by activity category (operating/investing/financing).
AS 24 Disclosure Approach - Less Stringent Than Ind AS 105
Unlike Ind AS 105/IFRS 5 which require specific measurement adjustments (e.g., cessation of depreciation upon 'held-for-sale' classification), single-line presentation below continuing operations on P&L face, and mandatory comparative restatement, AS 24 takes a simpler disclosure-only route:
(a) Measurement follows underlying asset/liability standards;
(b) Results shown separately in notes;
(c) No comparative restatement;
(d) No formal held-for-sale classification;
(e) Depreciation continues until disposal;
This approach reduces complexity but provides less analytical clarity compared to Ind AS standards, especially relevant for non-Ind-AS companies still reporting under legacy Indian GAAP.
Worked Examples on AS 24
Example 1: Plan to discontinue manufacturing division
Scenario: Sundaram Engineering’s board approves on February 15th 2026 a detailed plan to discontinue its industrial valves division (18% revenue). Announcement made February 20th 2026; sale expected within six-nine months.
Computation Table
| Item | Amount / Date / Note | Reference |
|---|---|---|
| Initial disclosure event | February 20th 2026 | Board announcement |
| Revenue from division | Rs 9,800 lakhs | For FY 2025-26 |
| Profit before tax | Rs 950 lakhs | For FY 2025-26 |
Journal Entry
No special entry triggered solely by classification as discontinuing operation under AS 24.
If impairment indicators arise due to planned disposal:
Dr Impairment Loss (P&L) Cr Accumulated Impairment, PPE
Actual gain/loss on disposal recorded upon sale completion.
Disclosure note presents revenue/profit/cash flows attributable to valves division separately from initial disclosure event onwards.
Example 2: Termination of geographical operation
Scenario: Krishna Steel Industries decides January 10th 2026 to terminate Eastern India region operations (one-third regional segments). Press release and employee communication same day.
Computation Table
| Item | Amount / Date / Note | Reference |
|---|---|---|
| Initial disclosure event | January 10th 2026 | Plan approval + announcement |
| Revenue from Eastern region | Rs 4,700 lakhs | For FY 2025-26 |
| Termination expenses | Rs 320 lakhs | Severance etc., FY 2025-26 |
Journal Entry
No special entry required solely due to classification as discontinuing operation.
Termination expenses such as severance:
Dr Employee Benefits Expense Cr Bank/Cash
Lease cancellation costs:
Dr Lease Termination Expense Cr Lease Liability / Bank
Disclosure note presents revenue/profit/cash flows relating specifically to Eastern India region separately beginning FY 2025-26; comparatives not restated per Para 31.
Disclosure Requirements under AS 24
AS 24 mandates granular disclosure of discontinuing operations to ensure users of financial statements can evaluate future cash flows and business risks, as required by Schedule III to the Companies Act, 2013. The standard prescribes specific items for disclosure from the initial disclosure event until the operation is fully discontinued or abandoned.
| Item | Requirement | Para Reference |
|---|---|---|
| Description of discontinuing operation | Business/geographical segment, date and nature of initial disclosure event, timing, carrying amounts | Para 20 |
| Revenue from discontinuing operation | Disclosed separately for the period | Para 23(a) |
| Profit or loss from ordinary activities | Pre-tax and tax expense disclosed separately | Para 23(b) |
| Gain or loss on disposal | Recognised when realised; pre-tax | Para 23(c) |
| Cash flows from discontinuing operation | Operating, investing, financing - disclosed separately | Para 23(d) |
| Net selling price | Of disposed assets and net cash flows from disposal, where ascertainable | Para 27 |
Auditors must verify that all required disclosures under AS 24 are made in the notes, supporting a true and fair view per SA 700.
Common Mistakes & Industry-Specific Considerations
Common errors auditors flag
- Classifying minor restructuring or product line changes as discontinuing operations (must be a separate major line of business or geographical area)
- Failing to identify the initial disclosure event correctly (should be earlier of binding sale agreement or detailed formal plan announcement)
- Restating comparative periods to separate discontinuing operations (this is Ind AS 105 treatment, not AS 24)
- Missing cash flow disclosure for discontinuing operations
- Inadequate disclosure of financial summary by component
- Treating asset disposals as discontinuing operations without proper component analysis
Industry application notes
In mid-market manufacturing, AS 24 disclosures are common during portfolio rationalisation. The standard is less prescriptive than Ind AS 105 and easier to apply but delivers less analytical clarity for users.
Family business groups often encounter inter-group restructurings. Whether these qualify as discontinuing operations depends on whether there is genuine discontinuance versus an internal reorganisation; careful analysis is needed.
For smaller listed companies still under the AS framework, SEBI material event disclosures on board approval frequently align with the AS 24 initial disclosure event. This ensures regulatory synchronisation between statutory accounts and market disclosures.
AS 24 vs Ind AS 105 vs IFRS: Key Differences
The table below summarises how AS 24 compares with Ind AS 105 (the Ind AS equivalent) and IFRS 5:
| Aspect | AS | Ind AS | IFRS |
|---|---|---|---|
| Approach | Disclosure-focused | Measurement and presentation focus | Same as Ind AS |
| Held-for-sale concept | Not formalised | Formalised criteria | Same as Ind AS |
| Comparative restatement | Not required | Required (Para 33-35) | Required |
| Single-line presentation | Not mandatory | Mandatory single line below continuing operations | Same |
| Depreciation cessation | Continues | Ceases on held-for-sale classification | Ceases |
India’s carve-outs in AS 24 mean companies do not reclassify assets as held-for-sale nor cease depreciation upon planned disposal, unlike under Ind AS/IFRS. Comparative period restatement is also not required under Indian GAAP. These differences simplify compliance but may reduce comparability with global peers.
Latest Amendments to AS 24 (FY 2026-27)
No amendments have been notified to AS 24 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.
Related Standards You Should Know
- [Ind AS 105](/ind-as-105-held-for-sale-discontinued-operations/), Equivalent and more comprehensive standard for Ind AS companies; introduces held-for-sale concept.
- [AS 28](/as-28-impairment-of-assets/), Impairment testing prior to discontinuance often triggers.
- [AS 29](/as-29-provisions-contingent-liabilities/), Provisions for restructuring costs.
- [AS 17](/as-17-segment-reporting/), Discontinuing operation often coincides with reportable segment.
- [AS 5](/as-5-net-profit-prior-period-changes/), Extraordinary items vs disposal gains/losses on discontinuing operations.
Need Help with AS 24 Compliance?
Patron Accounting LLP supports businesses across India in achieving full compliance with AS 24 Discontinuing Operations. Our team has deep experience advising on business disposals, segment reporting, and Schedule III note disclosures for manufacturing groups and family businesses.
Our services include:
- Statutory Audit
- Financial Reporting & Schedule III compliance
- Disclosure Review
- Ind AS Advisory
Schedule a 30-minute consultation with our Ind AS team, Pune · Mumbai · Delhi · Gurugram.
Frequently Asked Questions (FAQs)
Level I enterprises preparing financial statements under the Accounting Standards framework must comply with AS 24. For Level II and III entities, application is recommended but not mandatory. Companies following Ind AS must use Ind AS 105 instead of this standard.
A discontinuing operation is a major line of business or geographical area that an enterprise plans to dispose of entirely or abandon under a single coordinated plan. It must be operationally and financially distinguishable from the rest of the enterprise.
Unlike Ind AS 105, which requires measurement adjustments (held-for-sale classification, cessation of depreciation), single-line P&L presentation, and comparative restatement, AS 24 focuses only on disclosure without these requirements. Measurement follows underlying standards; results are presented in notes rather than on P&L face.
Disclosure starts at the ‘initial disclosure event’, which is the earlier of entering into a binding sale agreement for substantially all assets or when the board approves and announces a detailed formal plan to discontinue the operation.
No. Under Para 31 of AS 24, prior period comparatives are not restated separately for discontinuing operations. This contrasts with Ind AS 105 and IFRS 5 where comparative figures are restated to reflect discontinued segments distinctly.
Entities must disclose details such as description of the discontinued component, revenue, pre-tax profit/loss including tax expense, gain/loss on disposal when realised, cash flows by activity type, and net selling price where ascertainable, all in accordance with Paras 20-27 of the standard.
Cash flows attributable to the discontinuing operation must be disclosed separately by operating, investing, and financing activities in notes to accounts. This enables users to assess liquidity impacts distinct from continuing business segments.
No. Only disposals involving a separate major line of business or geographical area qualify as discontinuing operations under AS 24. Minor asset sales or product changes do not meet this definition and should be accounted for under regular asset standards like AS 10 Property Plant & Equipment.
Under AS 24 there is no requirement to cease depreciation or amortisation upon classification as a discontinuing operation. Depreciation continues until actual disposal in accordance with [AS 10]. This differs from treatment under Ind AS 105/IFRS 5.
For listed companies following Accounting Standards rather than Ind AS, SEBI material event announcements about board-approved disposals typically trigger the ‘initial disclosure event’ timing for purposes of complying with note disclosures under Para 14 of AS 24.
About This Article
Reviewed by CA & CS Team · Patron Accounting LLP
Technical reviewer: CA Sundram Gupta, FCA
Last reviewed: 2026-05-02
Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Accounting Standards) Rules, 2006 (reaffirmed in Companies (Accounting Standards) Rules, 2021)) · IFRS Foundation