M2 - Going Concern

Question 1

True or false? And entity is considered to be a going concern is it is reasonably expected to remain in existence and to be able to settle all its obligations for the Foreseeable future. Management is required to evaluate whether there is substantial doubt about an entity’s ability to continue as a Going concern within one year after the date that the financial statements are issued.

Answer 1

True

Question 2

Does the IFRS and US GAAP Offer guidance on the liquidation basis of accounting?

Answer 2

US GAAP does but the IFRS does not

Question 3

Does the IFRS and US GAAP Require the board of directors to evaluate the entities ability to continue as a going concern or do they require management to perform the evaluation?

Answer 3

Management

Question 4

Is going concern a fundamental assumption in US GAAP and IFRS?

Answer 4

Going concern is one of several fundamental assumptions in US GAAP. It is the only fundamental assumption in IFRS.

Question 5

True or False? The IFRS specifies the basis of accounting to be used by an entity for which there exists substantial doubt about its ability to continue as a going concern.

Answer 5

False, the IFRS does not specify the basis of accounting to be used by an entity for which there exists substantial doubt about its ability to continue as a going concern.