IAS 1- Presentation of Financial Statements Flashcards
Q.34- Wing- Going Concern- IAS 1
The assessment regarding Wing Co’s ability to remain a ‘going concern
Going concern assumption with FS: Presumes entity’s indefinite operation.
**IAS 1 requirement: **Mgmt assesses ability to continue as a going concern during financial statement preparation.
If presumption is invalid relevant disclosures are required.
Assesment: considers all avalable future information, at least 12 months from reporting period’s end, up to financial statement issurance date.
Government and bank relief measures: Should be factored into assesment.
E.g. Wing utilised business reduction and short debt schemes, but operations were suspended pre and pos-reporting. Loss making contracts and devlauation of investment properties raise doubts about its going concern status.
Liquidity and profitability: consideration is important to satisfy going concern assumption. Relevant where operaitons have been sspended temporarily.
Significant judgement and continual updates to the assessments up to the date of issuance of the financial statements may be required given the evolving nature.
Q.34-Wing Co- Disclosures
Discuss nature of info investors expected to disclose due to pandemic.
Investor concerns amid pandemic:
* Disclosure of relevant info regarding pandemic’s impact on reported profits and cashflows.
* Clear comms on issues faced due to pandemic.
* Explanation of unusual or infrequent items in FS.
Materiality assesments and voluntary informations:
* Concerns regarding materiality assesments leading to omission of useful information.
* Value of voluntary performance measures provided by companies to investors.
Accounting Policies and Judgements:
* Importance of understanding accounting policies, especially changes due to pandemic.
* Disclosure of significant judgements or assumptions made in applying accounting policies.
Identification and Disclosure of Material Events:
* Need for effective processess to identify and disclose material events post-reporting period.
* Information on magnitude of disruptions caused by pandemic and estimation uncertainty.
Impact of Pandemic on Revenue Accounting:
* Significance of judgement in determining effect of pandemic-related uncertanties on revenue accounting.
* Disclosure of decisions made in response to pandemic, such as contract modifications and onerous contracts.
Insurance Coverage and Government Support:
* Understanding potential insurance recoveries for pandemic-related losses.
* Disclosure of characteristics and impact of govt loans, tax relief or rebates.
Effect on Wing Co’s Business:
* Info needed on pandemic’s effect on Wing Co’s business operations, including remote working policies and travel restrictions.
* Importance of business continuity plans and impact on board of directors and employees.
Investor Focus on Remote-Based and Healthcare Industries:
* Shift in investor funds towards remote-based and healthcare sectors due to public health objectives.
* Potential impact on investment decisions regarding companies like Wing Co.
