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AS 24: Discontinuing Operations

A professional application note for accounts teams: what the standard controls, where it appears in company accounting, how to apply it and what evidence reviewers expect. Animated notes with Play, Pause, Replay, English and Hindi voice options are included below.

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AS 24: Discontinuing Operations: interactive explanation

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Professional scope: This is an implementation-oriented explanation for accountants, finance managers, controllers and reviewers responsible for company accounts.

1. What this standard controls

A discontinuing operation is disclosed separately when a major component is disposed of or abandoned under a single coordinated plan and meets the standard’s criteria.

Current position: Included in the ICAI Accounting Standards framework, subject to entity applicability, notified rules and later amendments.

2. Where it appears in the real accounting world

01Sale of a major business line
02Closure of a geographical operation
03Board-approved abandonment plan
04Measurement and disclosure of disposal effects

3. Practical application workflow

  1. Assess whether the component is distinguishable operationally and for reporting.
  2. Identify the initial disclosure event.
  3. Separate attributable revenue, expenses, assets, liabilities and cash flows.
  4. Update disclosures as the plan progresses.
  5. Ensure comparatives and segment information are consistent.

4. Real-world application example

The board approves and announces a binding plan to sell a major division representing a separate business segment. The accounts team identifies the initial disclosure event and presents required information separately.

5. Journal-entry and accounting record pattern

Underlying entriesRecord impairment, provisions, sale and closure costs under the relevant standards.
Disclosure controlMaintain a discontinuing-operation schedule for attributable results, assets, liabilities and cash flows.

Entry wording is illustrative. Actual accounts, tax effects, dimensions and narration depend on the entity’s chart of accounts and facts.

6. Month-end and year-end control file

Controls to operate

  • Board-plan and announcement review.
  • Component-level ledger and reporting mapping.
  • Disposal-cost and provision validation.
  • Cash-flow and segment consistency.
  • Quarterly update of estimates and status.

Common errors and red flags

  • Calling any product closure a discontinuing operation.
  • Using management intention without a qualifying event.
  • Mixing continuing and discontinuing results.
  • Failing to update disclosures.
  • Recording future operating losses as a provision.

7. Reviewer questions

  1. Is the component major and distinguishable?
  2. What event triggers initial disclosure?
  3. Which results and balances are directly attributable?
  4. What other standards govern measurement?
  5. Are comparative and segment disclosures aligned?

Related standards: AS 4, AS 17, AS 28, AS 29

Authoritative reference:

Before approving a material conclusion, check the latest ICAI compendium, notified Companies (Accounting Standards) Rules, entity applicability and subsequent amendments.

ICAI Accounting Standards Compendium →
Companies (Accounting Standards) Rules and amendments →

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Professional note: This educational resource does not replace entity-specific analysis, the latest notified standard, law, regulation, audit judgment or professional advice.