F2M1-Going conern Flashcards

1
Q

Management responsibility to evaluate -Going concern

A
  • Probable that co not able to meet obligation with one year from issuance date
  • substantial doubt continue as going concern
  • 1 year from issue date -Not balance sheet date.
  • each annual / interim
  • Consider both qualitative and quantitative factors (entities current financial position, entities obligation next year even if not recognized in current year, fund necessary -cashflow, other condition fin difficulty, negative trends.
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2
Q

Mitigating factors

A

Event/condition exist-creating doubt
consider
Mngt plans to mitigate

mitigating effect evaluated based on

  1. probable plan will effectively implemented.
  2. plans will be successful.

will be successful in alleviating doubt

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3
Q

Management evaluation and disclosure

A
  1. Substantial doubt alleviated - must disclose - include doubt, Mngt evaluation, plan, allivated
  2. Substantial doubt not alleviated =must disclose
    Going concern is used in both the cases.
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4
Q

US Gap Vs IFRS

A
  1. US GAAP requires liquidation basis if liquidation is imminent / IFRS does not give any guidance on going or liquidation method.
  2. US -disclose if substantial doubt
    IFRS- disclose if Mngt is aware of material inconsistency -may give rise to doubt
  3. US-1 year from date of issuance
    IFRS - 1 year from balance sheet date.
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