Going Concern (F2:M2)

Question 1

when an entity is considered a going concern, is it in good financial health or bad?

Answer 1

Good!

Question 2

under GAAP, as it relates to going concern, what are the two basis of accounting?

Answer 2

going concern (good)
liquidation (bad; liquidation is imminent)

Question 3

under GAAP, what is the time period that is associated with the evaluation of going concern?

Answer 3

within one year from the issuance of FS

Question 4

management should evaluate mitigating effect based on? (2 things)

Answer 4

whether it is probable that plans will be effectively implemented

whether it is probable that the implemented plans will be successful in mitigating the adverse conditions

Question 5

differences between GAAP & IFRS

Answer 5

IFRS does not provide guidance on the basis of accounting to use when liquidation is imminent

IFRS requires disclosure when management is aware of material uncertainties that may give rise…

IFRS requires assessment of going concern conditions at least one year from BS date

Question 6

who performs the evaluation of going concern status?

Answer 6

management