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CA Intermediate · Advanced Accounting · AS 24 Discontinuing Operations

Which of the following is NOT, by itself, a discontinuing operation under AS 24?

Phasing out a product line within a continuing segment as ordinary portfolio change is not a discontinuing operation under AS 24. Disposal or abandonment of a separate major line of business or geographical area under a formal plan does qualify.

  1. ASale of an entire business segment under a single plan, with the operation being a separate major line of business that is distinguished operationally and for financial reporting
  2. BAbandonment of a separate geographical area of operations under a formal plan
  3. CPhasing out of a product line within a continuing business segment as part of normal product-mix changeCorrect
  4. DTermination of a major line of business via piecemeal disposal of assets and settlement of liabilities under a single plan

Explanation

AS 24 states that gradual evolution of the enterprise's product or service portfolio, such as phasing out a product line or class of service, does not by itself make an operation discontinuing. The other options are disposals or abandonment of a separate major line or geographical area under a plan, so they qualify. The product-line phase-out is therefore the exception.

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