Notes to financials, Discontinued Ops, Going concern

Question 1

Identify the contents of the summary of significant accounting policies to the financial statements

Answer 1

Summary of significant account policies
identify and describe:
- Measurement bases used in preparing the FS
- specific accounting principles and methods used

Question 2

What are the US GAAP disclosure requirements for risk and uncertainty

Answer 2

1. Nature of operations
2. use of estimates in preparing the financial statements
3. significant estimates
4. current vulnerability due to certain concentrations

Question 3

Under what circumstances is an entity considered a going concern?

Answer 3

an entity is considered a going concern if it is rasonable expected to remain in existence and be able to settle all its obligations for the foreseeable future

Question 4

What is management’s responsibility to evaluate a company’s ability to continue as a going concern?

Answer 4

evaluate whether there is substantial doubt about an enetiy’s ability to continue as a going concern for a reasonalbe period or not to exceed one year beyond the issuance date of the financial statement

Question 5

Under what conditions to substantial doubt exist

Answer 5

when it is probable (likely to occur) that the entity will not be able to met its obligations as they become due with a year from the financial statements issuance date

They are based on relevant conditions and events that are known and reasonable knowable at the FS issuance date

Question 6

What should management consider

Answer 6

1. current financial condition
2. entity’s obligations due or anticipated in the next year
3. the funds necessary to maintain operations in the next year
4. both internal and external matters indicating financial difficulties for the entity

Question 7

What disclosures are required when substantial doubt is alleviated?

Answer 7

1. primary conditions that initially raised concern
2. Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations
3. management’s plans that alleviated the substantial doubt

Question 8

What disclosures are required if doubt is not alleviated?

Answer 8

• the fact that there is a doubt
• primary conditions or events that raise the concern
• management’s evaluation of the significance of those conditions
• managements plans that are intended to mitigate the adverse conditions or events