A component of an entity or a group that either has been disposed of or is classified as held for sale (HFS), and as such it is no more operational. Disposal of such a component implies that a disposing entity will lose control over it.

A discontinued operation can either be: 1) a separate major line of business or geographical area of operations or 2) part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or 3) a subsidiary acquired exclusively with an intention to resell in the future or at a certain date.

In accounting for discontinued operations, certain disclosures have to be made, particularly in relation to presentation in the statement of comprehensive income. In this statement or a separate statement (if applicable), the sum of the post-tax profit or loss of the discontinued operation and the post-tax gain or loss recognized on the measurement to fair value less cost to sell or fair value adjustments on the disposal of the disposal component is presented as a single figure on the face of the statement of comprehensive income or a specific section in the separate statement.

In the case that an entity discontinues classification of a component as held for sale, the amounts relating to that component previously presented in discontinued operations must be reclassified and added in income from continuing operations for the respective period or periods.