Advanced Accounting · AS 24 Discontinuing Operations

AS 24 Discontinuing Operations: Measurement and Presentation in Financial Statements

Updated 4 October 2026 · Fact-checked

AS 24 does not create new measurement rules. You measure a discontinuing operation's assets, liabilities, income and expenses using the other relevant standards, such as AS 2, AS 28 and AS 29. You then show its pre-tax profit or loss, tax, and gain or loss on disposal or settlement separately, either on the face of the statement of profit and loss or in the notes.

Understand Measurement and Presentation in Financial Statements

AS 24 is a disclosure standard. It does not tell you how to value inventory, test an asset for impairment or provide for a liability. Those rules stay in AS 2, AS 28, AS 29 and the other standards. AS 24 only says: apply them as usual to the operation being discontinued, then report its results separately so users can see what continues and what does not.

The key idea is that there is an initial disclosure event. It is the earlier of the enterprise entering into a binding sale agreement for substantially all the assets attributable to the discontinuing operation, or the board of directors or similar governing body having both approved and announced a detailed formal plan. From that event, you start separate disclosure. Before it, the operation is just part of normal results.

Measurement follows the other standards. For example, if the plan means assets may be impaired, you apply AS 28 and recognise the impairment loss. If the plan creates a present obligation for termination costs, you apply AS 29 and recognise a provision only when its recognition tests are met. AS 24 itself does not create a provision just because a plan exists. Costs of a future restructuring that does not meet AS 29 are not provided for.

Presentation is the part examiners test most. You disclose the amount of the pre-tax gain or loss on ordinary activities attributable to the discontinuing operation, and the income tax expense related to it. You also disclose the pre-tax gain or loss recognised on the disposal of assets or settlement of liabilities attributable to the discontinuing operation, and the related tax expense. These can be shown on the face of the statement of profit and loss or in the notes. The standard requires the same amounts for comparative periods, presented on a comparable basis.

AS 24 also requires descriptive and balance sheet disclosures. These are not optional extras. You must disclose:

a description of the discontinuing operation
the business or geographical segment it belongs to
the date and nature of the initial disclosure event
the timing of the expected completion, if known
the carrying amounts of the total assets and the total liabilities to be disposed of at the balance sheet date

The gain or loss on disposal and the operating result are two separate disclosures. Keep them apart, each with its own tax.

Key rules to remember

Disclosure 1: ordinary activities: Pre-tax profit or loss of the discontinuing operation = Revenue of the operation − Expenses of the operation (ordinary activities); Show it with the income tax expense related to it. Do not mix it with the disposal gain or loss.
Disclosure 2: disposal or settlement: Pre-tax gain or loss on disposal = Net sale proceeds − Carrying amount of net assets disposed (after any impairment loss already recognised); Show it with the related tax expense. If there is a gain, it is a gain; if proceeds are lower, it is a loss.
Required descriptive disclosures: Description of the operation + segment + date and nature of the initial disclosure event + timing of expected completion + carrying amounts of total assets and total liabilities to be disposed of; These are required disclosures under AS 24, not optional extras. Add them to the amounts in Disclosures 1 and 2.
Measurement rule: Recognition and measurement of a discontinuing operation's items = As per the relevant AS (AS 2, AS 28, AS 29 etc.); AS 24 adds no new valuation rule. It decides what to disclose, not how to value.
Timing rule: Separate disclosure starts at the initial disclosure event and continues until the discontinuance is completed; The event is the earlier of a binding sale agreement for substantially all the assets attributable to the discontinuing operation, or the board of directors or similar governing body having both approved and announced a detailed formal plan.
Net result of the operation: Net effect on profit after tax = (Operating result after tax) + (Disposal result after tax); A tax expense reduces a profit or gain. A tax saving reduces a loss. Use this only as a cross-check, because the two parts must be disclosed separately.

How to solve Measurement and Presentation in Financial Statements questions

Use this order for any AS 24 presentation question. It keeps your working clean and earns step marks.

1Check that the event qualifies as a discontinuing operation and fix the initial disclosure event date. Separate disclosure applies only from that date.
2List every item belonging to the operation: revenue, expenses, assets, liabilities. Leave out items of the continuing business.
3Apply the relevant standard first. Test assets for impairment under AS 28 and write inventory at lower of cost and NRV under AS 2. Provide for obligations only if AS 29 conditions are met.
4Compute the operating pre-tax profit or loss of the operation for the period, and then its tax.
5Compute the pre-tax gain or loss on disposal of assets and settlement of liabilities, and then its tax.
6Present the two results separately, with tax, on the face of the statement of profit and loss or in the notes. Give comparative figures on a comparable basis.
7Add the other required disclosures: description of the operation, the business or geographical segment, the date and nature of the initial disclosure event, the timing of expected completion, and the carrying amounts of total assets and liabilities to be disposed of.
8State your conclusion in one line, naming the standard you applied for each item.

Quickest way: Two-box method for MCQs and written answers

When to use it: Use when time is short, or when the question has many figures and you must sort them quickly.

Draw two boxes: Box A for operating results of the operation, Box B for disposal or settlement gain or loss.
Drop each figure in a box. Revenue and running expenses go in A. Sale proceeds, carrying amounts and impairment loss on disposal go in B.
Cross out figures of the continuing business. They are distractors.
Compute the pre-tax result for each box, then deduct tax shown for that box only.
For MCQs: if an option adds A and B into one figure where the question asks for one of them, eliminate it. If an option provides for future costs with no present obligation, eliminate it.
For written answers: write a heading for each box, show working in one line each, and end with the disclosure statement. This format earns separate step marks.

Common mistakes in Measurement and Presentation in Financial Statements

Believing AS 24 gives its own valuation rules for assets of the discontinuing operation.
Students assume a dedicated standard must contain its own measurement rules.
Fix: Remember that AS 24 only adds presentation and disclosure. Cite AS 2, AS 28 or AS 29 for measurement.
Combining operating profit and disposal gain into one figure.
Students want a single bottom line for the operation.
Fix: Show the two amounts and their taxes separately. A combined total can be an extra line, never a replacement.
Creating a provision for future operating losses or restructuring costs just because a plan exists.
The plan feels like a commitment, so students book the cost early.
Fix: Provide only when AS 29 recognition criteria are met. Future operating losses are not provided for.
Starting separate disclosure from the wrong date.
Students use the date of the decision or the date of sale completion instead of the initial disclosure event.
Fix: Use the earlier of a binding sale agreement for substantially all the assets attributable to the discontinuing operation, or a detailed formal plan that the board or similar governing body has both approved and announced.
Ignoring tax or showing a single tax figure for both components.
Questions give one tax rate and students apply it to the total.
Fix: Compute tax separately on the operating result and on the disposal gain or loss, and present each with its own pre-tax figure.
Leaving out comparative figures.
Students focus on the current year only.
Fix: State that prior period disclosures are restated on a comparable basis, as the standard requires.
Treating the description, event date and carrying amounts of assets and liabilities as optional.
Students think only the profit and loss amounts matter.
Fix: Write the required disclosures every time: description, segment, date and nature of the initial disclosure event, timing of expected completion, and carrying amounts of total assets and liabilities to be disposed of.

Worked examples

Example 1

A company decides to discontinue its Division X. The initial disclosure event occurs during the year. For the year, Division X had revenue of ₹80,00,000 and ordinary expenses of ₹92,00,000. Tax saving on this loss is ₹3,60,000. During the year, Division X's assets with carrying amount ₹40,00,000 were sold for ₹46,00,000, and a related liability with carrying amount ₹5,00,000 was settled for ₹5,00,000. Tax on the disposal gain is ₹1,80,000. Show the AS 24 disclosures.

Show the solution

Operating result: revenue ₹80,00,000 − expenses ₹92,00,000 = pre-tax loss of ₹12,00,000.
Tax on the operating result is a tax saving of ₹3,60,000. The tax saving reduces the loss, so the loss after tax is ₹12,00,000 − ₹3,60,000 = ₹8,40,000.
Disposal: proceeds ₹46,00,000 − carrying amount ₹40,00,000 = pre-tax gain of ₹6,00,000.
The liability was settled at its carrying amount, so there is no gain or loss on settlement.
Tax on the disposal gain is a tax expense of ₹1,80,000. The tax expense reduces the gain, so the gain after tax is ₹6,00,000 − ₹1,80,000 = ₹4,20,000.
Disclose the two amounts separately on the face of the statement of profit and loss or in the notes, with comparatives.
Cross-check: total after-tax effect = −₹8,40,000 + ₹4,20,000 = −₹4,20,000, a net loss.

Answer: Disclose a pre-tax loss of ₹12,00,000 on ordinary activities with a tax saving of ₹3,60,000 (loss after tax ₹8,40,000), and a pre-tax gain of ₹6,00,000 on disposal with a tax expense of ₹1,80,000 (gain after tax ₹4,20,000). The combined after-tax effect is a loss of ₹4,20,000.

Example 2

A company approves and announces a detailed formal plan to sell its Unit P. At the year end, Unit P's plant has a carrying amount of ₹30,00,000 and a recoverable amount of ₹26,00,000. In the next year the plant is sold for ₹26,00,000. The company also says it expects to lose ₹5,00,000 from running Unit P until the sale. Advise on the accounting for the current year and the disposal.

Show the solution

Measurement comes from other standards. Under AS 28, carrying amount ₹30,00,000 is above recoverable amount ₹26,00,000, so recognise an impairment loss.
Impairment loss = ₹30,00,000 − ₹26,00,000 = ₹4,00,000. Recognise it in the current year and attribute it to the discontinuing operation.
The expected future operating loss of ₹5,00,000 is not a present obligation. Under AS 29, future operating losses are not provided for, so do not book it.
Disclose the impairment loss and the ordinary results of Unit P separately in the current year, as the initial disclosure event has occurred.
In the next year, the plant is carried at ₹26,00,000 and sold for ₹26,00,000. Gain or loss on disposal = ₹26,00,000 − ₹26,00,000 = nil. The loss was already recognised as impairment, so no further loss arises on sale.
Disclose the nil disposal result with its tax, if any, separately for the discontinuing operation until the discontinuance is completed.

Answer: Recognise a ₹4,00,000 impairment loss in the current year under AS 28 and do not provide the ₹5,00,000 expected operating loss. Disclose Unit P's results separately. On sale next year at ₹26,00,000, there is no further gain or loss on disposal.

Exam tips

Always name the standard behind each measurement: AS 2 for inventory, AS 28 for impairment, AS 29 for provisions. Examiners give marks for this link.
Write two clearly labelled lines in your answer: operating result with tax, and disposal gain or loss with tax. Never merge them.
In provision questions, ask whether a present obligation exists. If not, write that no provision is made and give the reason.
In MCQs, watch the date. If the initial disclosure event has not happened, there is no separate disclosure yet.
Mention comparative figures and the option of showing the amounts on the face or in the notes. These are easy extra marks.
In a full disclosure answer, add the required descriptive items: description, segment, date and nature of the initial disclosure event, expected completion timing, and carrying amounts of total assets and liabilities to be disposed of.

Practice questions from AS 24 Discontinuing Operations

Measurement and Presentation in Financial Statements in other exams

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

Measurement and Presentation in Financial Statements: frequently asked questions

Does AS 24 tell me how to measure the assets of a discontinuing operation?

No. You measure them under the relevant standards, for example AS 2 for inventories, AS 28 for impairment and AS 29 for provisions. AS 24 only adds the separate presentation and disclosure.

Where do I show the results of a discontinuing operation?

You can show the required amounts on the face of the statement of profit and loss or in the notes. Whichever you choose, give the pre-tax result, the related tax, the disposal gain or loss and its tax separately.

Is the gain on sale part of the operating profit of the discontinuing operation?

No. The pre-tax gain or loss on disposal of assets or settlement of liabilities is a separate disclosure from the profit or loss on ordinary activities. Each is shown with its own tax expense.

When does separate disclosure begin?

It begins at the initial disclosure event. This is the earlier of a binding sale agreement for substantially all the assets attributable to the discontinuing operation, or the board or similar governing body having both approved and announced a detailed formal plan.

Which descriptive disclosures does AS 24 require besides the profit and loss amounts?

You must give a description of the discontinuing operation, the business or geographical segment, and the date and nature of the initial disclosure event. You must also give the timing of expected completion and the carrying amounts of total assets and liabilities to be disposed of. These are required, not optional.