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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Which of the following is NOT a condition for a component of an enterprise to qualify as a discontinuing operation under AS 24?

The 25% turnover requirement is not a condition. AS 24 asks only that the component be a separate major line of business or geographical area, be distinguishable operationally and for financial reporting, and be disposed of substantially entirely or abandoned. It sets no turnover percentage.

  1. AIt represents a separate major line of business or geographical area of operations
  2. BIt can be distinguished operationally and for financial reporting purposes
  3. CThe enterprise disposes of substantially all of it in a single transaction or piecemeal, or abandons it
  4. DThe component must contribute at least 25% of the enterprise's total turnoverCorrect

Explanation

AS 24 requires the enterprise to be disposing of substantially all of the operation, the operation to be a separate major line of business or geographical area, and to be distinguishable operationally and for financial reporting. It prescribes no percentage turnover threshold such as 25%, so that option is not a condition.

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