Advanced Accounting · AS 24 Discontinuing Operations

AS 24 Disclosures and Restatement of Prior Periods for Discontinuing Operations

Updated 4 October 2026 · Fact-checked

AS 24 requires an enterprise to disclose, from the period of the initial disclosure event, a description of the discontinuing operation, its segment, key dates, carrying amounts of assets and liabilities, revenue, expenses, tax and cash flows. It must update these until completion and restate comparatives to separate continuing and discontinuing operations. Answer by listing the items, then applying them to the facts.

Understand Disclosures and Restatement of Prior Periods

A discontinuing operation is a separate major line of business or geographical area that the enterprise is selling, demerging, or winding down under a single plan, and that can be distinguished operationally and for financial reporting. Investors want to know how much of the results comes from the part that is leaving. That is the reason for the extra disclosures.

The disclosures begin in the financial statements for the period in which the initial disclosure event occurs. This is the earlier of two things: a binding sale agreement for substantially all the assets of the operation, or the board approving a detailed formal plan and announcing it. Approval alone is not enough.

The disclosures cover what the operation is, where it sits in segment reporting, when the event happened and when completion is expected. They also cover the carrying amounts of assets to be disposed of and liabilities to be settled, the revenue and expenses, the pre-tax profit or loss and related tax, the gain or loss on disposal and its tax, and net cash flows from operating, investing and financing activities. Give them separately for each discontinuing operation.

The disclosures are not one-time. You repeat them in each later period up to and including the period in which the discontinuance is completed. In later periods you also describe significant changes in the amount or timing of cash flows from the assets and liabilities, for example a change in the expected sale price. If the plan is withdrawn, you disclose that fact and its effect.

Financial statements prepared after the initial disclosure event also show prior periods. Those comparatives must be restated so that assets, liabilities, revenue, expenses and cash flows of continuing and discontinuing operations are shown separately, in the same way as for the current period. Restating means reclassifying and presenting separately. It does not mean changing the total profit.

Key rules to remember

Definition test (all must be met): Component + single plan of disposal or abandonment + separate major line of business or geographical area + distinguishable operationally and for financial reporting; If any one condition fails, AS 24 disclosures are not triggered.
Initial disclosure event: Earlier of (binding sale agreement for substantially all assets) and (board approves detailed formal plan AND announces it); Disclosures start in the financial statements of the period in which this event occurs.
Core disclosure list: Description; segment; date and nature of event; expected completion; carrying amounts of assets and liabilities; revenue, expenses, pre-tax result and tax; gain or loss on disposal and tax; net cash flows; Learn it as D-S-D-D-C-R-T-C. The pre-tax gain or loss on disposal and the related tax must be shown on the face of the statement of profit and loss. The other disclosures may be given in the notes or on the face.
Duration of disclosures: From the period of the initial disclosure event up to and including the period in which the discontinuance is completed; Completion means the plan is substantially complete or abandoned, even if some payments from buyers are still pending.
Comparatives: Prior period figures restated to separate continuing and discontinuing operations, in the same manner as the current period; Total profit is unchanged. Only the split changes.
Offsetting: Assets and liabilities of the discontinuing operation are not netted off; Show total assets to be disposed of and total liabilities to be settled separately.

How to solve Disclosures and Restatement of Prior Periods questions

Use this order for any question on AS 24 disclosures or restatement.

1Test the definition: single plan, separate major line of business or geographical area, and distinguishable. If the facts fail a condition, say AS 24 does not apply.
2Fix the initial disclosure event. Compare the date of the binding sale agreement with the date on which the board both approved and announced the plan. Take the earlier date.
3Decide which financial statements are affected: the period containing that event, then every later period up to completion.
4List the required disclosures one by one, and tie each to a number or fact in the question.
5For numerical parts, split revenue, expenses, pre-tax result and tax between continuing and discontinuing operations. Check that the two parts add up to the total.
6Restate the comparatives with the same split and show the prior year's figures alongside the current year's.
7State the updating rules: repeat the disclosures until completion, disclose significant changes in cash flows, and disclose any withdrawal of the plan and its effect.

Quickest way: Date, list, split

When to use it: Use it when time is short, for both MCQs and written answers.

MCQ: look for the trap. Approval without announcement is not an initial disclosure event. Comparatives are restated, not left as reported. Disclosures run until completion.
MCQ: if two dates are given, pick the earlier valid trigger. Check that the board both approved and announced.
Written answer: write one line giving the definition conclusion, one line giving the trigger date, then a bullet list of disclosures. This format earns step marks.
Numerical answer: draw three columns (Total, Continuing, Discontinuing) for the current and prior year. Check that Continuing plus Discontinuing equals Total before writing any note.
Close with one sentence on updating and comparatives.

Common mistakes in Disclosures and Restatement of Prior Periods

Treating board approval of a plan as the initial disclosure event.
Students remember 'board plan' and forget that the plan must also be announced, or that a binding sale agreement may come first.
Fix: Write both limbs. The event is the earlier of a binding sale agreement and board approval plus announcement.
Leaving prior year figures as originally reported.
Students think restatement means correcting an error.
Fix: Restate the comparatives to separate continuing and discontinuing operations. Total profit stays the same.
Stopping the disclosures after the first year.
Students think of it as a one-time note.
Fix: Continue the disclosures in each period up to and including the period in which the discontinuance is completed.
Netting assets against liabilities of the discontinuing operation.
It feels natural to show net assets being sold.
Fix: Disclose the carrying amount of total assets and total liabilities separately.
Missing items in the disclosure list, such as the tax on the result, the cash flows or the expected completion date.
Students learn only the main items: revenue, expenses and profit.
Fix: Learn the full list and tick it off in the answer.
Applying Ind AS 105 rules, such as a single post-tax line and held-for-sale measurement, to an AS 24 question.
Students mix the two standards because the topic names are similar.
Fix: For AS 24, show the disclosures as listed and do not use a single post-tax line. Mention Ind AS 105 only if the question asks for a comparison.

Worked examples

Example 1

The board of Meru Ltd approved a detailed formal plan on 15 January 2027 to sell its chemicals division, a separate major line of business, and announced it on 20 February 2027. A binding sale agreement for substantially all the division's assets was signed on 10 March 2027. The year ends on 31 March 2027. State the initial disclosure event and the disclosures required in the financial statements for the year ended 31 March 2027.

Show the solution

The chemicals division is a separate major line of business, disposed of under a single plan and distinguishable, so it is a discontinuing operation.
The board approved the plan on 15 January 2027 but announced it on 20 February 2027. The board limb is met only on 20 February 2027.
The binding sale agreement is dated 10 March 2027. The earlier of 20 February 2027 and 10 March 2027 is 20 February 2027.
The event falls in the year ended 31 March 2027, so the disclosures begin in these financial statements.
Required disclosures: description of the chemicals division; the segment in which it is reported under AS 17; the date and nature of the initial disclosure event; the expected date or period of completion, if known; and the carrying amounts of total assets to be disposed of and total liabilities to be settled at 31 March 2027.
Also required: revenue and expenses of the division for the year; its pre-tax result and the related tax expense; any pre-tax gain or loss on disposal and its tax; and net cash flows from operating, investing and financing activities.
The pre-tax gain or loss on disposal and the related tax must be on the face of the statement of profit and loss. The other disclosures may be in the notes or on the face.
Comparatives for the previous year are restated to separate the division from continuing operations.

Answer: The initial disclosure event is 20 February 2027, because the board approval and the announcement were both complete on that date, before the binding agreement of 10 March 2027. The full set of AS 24 disclosures is given for the year ended 31 March 2027, and comparatives are restated.

Example 2

For the year ended 31 March 2027, Tara Ltd reported total revenue of ₹12,00,000 and total expenses of ₹10,50,000. The chemicals segment is a discontinuing operation, with revenue of ₹3,00,000 and expenses of ₹3,30,000 in the current year. For the previous year, total revenue was ₹11,00,000 and total expenses ₹9,60,000, of which chemicals accounted for revenue of ₹2,80,000 and expenses of ₹2,90,000. Assume tax at 30% on both continuing and discontinuing results and that the tax saving on losses is recognised. Show the restated comparison of continuing and discontinuing operations, including tax.

Show the solution

Current year, continuing: revenue ₹12,00,000 − ₹3,00,000 = ₹9,00,000. Expenses ₹10,50,000 − ₹3,30,000 = ₹7,20,000. Pre-tax profit = ₹1,80,000. Tax at 30% = ₹54,000. Post-tax profit = ₹1,26,000.
Current year, discontinuing: ₹3,00,000 − ₹3,30,000 = pre-tax loss of ₹30,000. Tax saving at 30% = ₹9,000, so the post-tax loss is ₹21,000.
Check: pre-tax ₹1,80,000 − ₹30,000 = ₹1,50,000, which equals ₹12,00,000 − ₹10,50,000. Post-tax ₹1,26,000 − ₹21,000 = ₹1,05,000, which equals ₹1,50,000 less 30% tax of ₹45,000.
Previous year, continuing: revenue ₹11,00,000 − ₹2,80,000 = ₹8,20,000. Expenses ₹9,60,000 − ₹2,90,000 = ₹6,70,000. Pre-tax profit = ₹1,50,000. Tax at 30% = ₹45,000. Post-tax profit = ₹1,05,000.
Previous year, discontinuing: ₹2,80,000 − ₹2,90,000 = pre-tax loss of ₹10,000. Tax saving at 30% = ₹3,000, so the post-tax loss is ₹7,000.
Check: pre-tax ₹1,50,000 − ₹10,000 = ₹1,40,000, which equals ₹11,00,000 − ₹9,60,000. Post-tax ₹1,05,000 − ₹7,000 = ₹98,000, which equals ₹1,40,000 less 30% tax of ₹42,000.
Present the two years side by side. The previous year's figures are restated to the same continuing and discontinuing split, and total profit for the previous year is unchanged.

Answer: Current year: continuing revenue ₹9,00,000, expenses ₹7,20,000, pre-tax profit ₹1,80,000, tax ₹54,000, post-tax profit ₹1,26,000; discontinuing pre-tax loss ₹30,000, tax saving ₹9,000, post-tax loss ₹21,000. Previous year (restated): continuing revenue ₹8,20,000, expenses ₹6,70,000, pre-tax profit ₹1,50,000, tax ₹45,000, post-tax profit ₹1,05,000; discontinuing pre-tax loss ₹10,000, tax saving ₹3,000, post-tax loss ₹7,000.

Exam tips

In theory questions, start with the definition test and the initial disclosure event. Then list the disclosures. Examiners give marks for each item.
In MCQs, watch for options that use 'approval' alone as the trigger, or that say comparatives are not restated. Both are wrong.
In numerical questions, draw Total, Continuing and Discontinuing columns for both years and check that the parts add up to the total before presenting.
Remember that the disclosures continue until the period in which the discontinuance is completed, and that a withdrawn plan must be disclosed with its effect.
If a question asks for the difference from Ind AS 105, give two or three points: the trigger (initial disclosure event versus held-for-sale classification or disposal), measurement (AS 24 has no held-for-sale measurement rule), and presentation (Ind AS 105 shows a single post-tax amount on the face of the statement).

Practice questions from AS 24 Discontinuing Operations

Disclosures and Restatement of Prior Periods in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalPrior Period Errors and Retrospective Restatement

Disclosures and Restatement of Prior Periods: frequently asked questions

What disclosures does AS 24 require for a discontinuing operation?

You disclose a description of the operation, its segment, the date and nature of the initial disclosure event, and the expected completion date. You also disclose carrying amounts of assets and liabilities, revenue, expenses, pre-tax result and tax, gain or loss on disposal with its tax, and net cash flows. The pre-tax gain or loss on disposal and the related tax must be on the face of the statement of profit and loss. The other disclosures may be in the notes or on the face.

Do I have to restate comparative figures under AS 24?

Yes. Financial statements prepared after the initial disclosure event must restate prior period comparatives. Assets, liabilities, revenue, expenses and cash flows of continuing and discontinuing operations are shown separately for those periods as well. The total profit does not change.

For how long are AS 24 disclosures given?

They are given from the period in which the initial disclosure event occurs up to and including the period in which the discontinuance is completed. In later periods you also describe significant changes in the amount or timing of cash flows. If the plan is withdrawn, you disclose that fact and its effect.

What is the difference between AS 24 and Ind AS 105 on discontinued operations?

AS 24 is triggered by the initial disclosure event, and it deals mainly with disclosure. Ind AS 105 is triggered when a component is classified as held for sale or is disposed of. It also sets measurement rules for held-for-sale assets and presents a single post-tax amount on the face of the statement of profit and loss.