AS 24 of ICAI sets clear rules for identifying, presenting and disclosing a discontinuing operation. This guide explains the applicability categories, initial disclosure triggers and reporting duties for Indian companies.
What Is AS 24 of ICAI?
AS 24 prescribes how an enterprise should recognise, present and disclose a business segment or component that it plans to discontinue. It improves transparency by showing the impact of the discontinuance on profit, assets, liabilities and cash flows. A discontinuing operation must be:
A separate major line of business or geographical segment
Capable of being distinguished for financial reporting
Covered by a detailed, formal plan approved by management
Applicability of AS 24 of ICAI
AS 24 is mandatory for accounting periods beginning on or after 1 April 2004 for enterprises that fall into any one of the following ICAI-defined categories:
Mandatory for:
Listed companies
Unlisted enterprises with turnover > ₹50 crore (excluding other income)
Enterprises with borrowings > ₹10 crore
Banks, financial institutions, insurance companies
Holding or subsidiary of any of the above
Other enterprises may apply it voluntarily.
These criteria follow the ICAI “Applicability of Accounting Standards” framework.
When Does Disclosure Begin Under AS 24?
AS 24 requires initial disclosure at the earliest of these events:
A binding sale agreement for the discontinuing operation is signed.
Board or governing authority approves a detailed, formal discontinuance plan.
Public announcement of the discontinuance is made in a manner that creates valid expectations among stakeholders.
Once any one of these occurs, disclosures continue in every reporting period until the discontinuance is complete.
Recognition and Measurement
Recognition
A discontinuing operation is recognised when:
A formal, detailed plan exists, and
Steps to implement the plan have begun, or
A binding agreement or substantial public announcement is made.
Measurement
AS 24 does not specify new valuation rules. Measurement follows other Accounting Standards, such as:
AS 10 – Property, Plant and Equipment
AS 28 – Impairment of Assets
AS 29 – Provisions, Contingent Liabilities and Contingent Assets
Assets and liabilities linked to the discontinuing operation are measured using the applicable standards.
Treatment of Gains and Losses
AS 24 requires the results of discontinuing operations to be presented separately. Under AS 5 (Net Profit or Loss for the Period):
Gains or losses from discontinuing operations are not extraordinary items.
They should instead be clearly disclosed through proper classification and notes.
AS 24 itself does not use the term “exceptional items.”
Disclosure Requirements Under AS 24
Initial disclosures
Description of the operation
Date of board approval or agreement
Expected method of discontinuance (sale/closure)
Expected completion date
Carrying amounts of assets and liabilities to be disposed
Expected proceeds
Continuing disclosures
Progress updates
Material changes to the plan
Actual disposal proceeds
Cash flows of the discontinuing operation (operating, investing, financing)
All disclosures appear in the Notes to Accounts.
Example: AS 24 in Practice
A company decides to sell its Mumbai consumer products division. On 20 July 2025, the board approves a detailed plan and authorises management to announce it. From that reporting period onward, the company must disclose:
Division-wise revenue and expenses
Related assets and liabilities
Impairment, if any
Expected and actual proceeds
Cash flows from that division
The disclosures continue until the sale is complete.
Compliance Tips for Accountants
Maintain separate records for the discontinuing operation.
Document the formal plan, board approval date and public announcement.
Review impairment early under AS 28.
Ensure provisions comply with AS 29.
Align disclosures with AS 17 Segment Reporting if the segment is reportable.
Present the tax impact related to the discontinuing operation in the notes.
Ensure disclosures match Schedule III format.
Seek advice from an authorised professional for complex cases.
Concluding Summary
AS 24 provides a structured method to report discontinuing operations. It demands early disclosure, consistent updates and clear presentation until the discontinuance is complete. Accurate classification, careful measurement and disciplined reporting improve credibility with investors and auditors.
What you can do next
Identify if any planned business disposals meet AS 24 criteria
Confirm the earliest disclosure trigger
Update segment, impairment and provision assessments
FAQs
1. What is AS 24 of ICAI?
It is the accounting standard that prescribes identification, presentation and disclosure of discontinuing operations.
2. When does initial disclosure begin?
At the earliest of: signing a binding agreement, board approval of a formal plan, or a public announcement.
3. Are gains or losses extraordinary items?
No. Under AS 5, they must not be treated as extraordinary items.
4. Who must follow AS 24?
Listed companies, large unlisted enterprises (turnover > ₹50 crore), enterprises with borrowings > ₹10 crore, and banks/financial institutions.
5. How long do disclosures continue?
Until the discontinuance is completed.
For detailed/official copy:
AS 24 of ICAI (As on 01/04/2025): Discontinuing Operations
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