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Under U.S. GAAP, an entity's financial statements are prepared under the assumption that the entity will continue as a going concern until liquidation is imminent (i.e., the "going concern basis of accounting"). Once liquidation is deemed imminent, an entity must apply the liquidation basis of accounting under ASC 205-30. 2
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The accounting standards require the preparation of a going concern assessment, taking into account all available information about the future, for a period of at least 12 months.
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Overview of going concern assessment. Step 1: Assess whether substantial doubt is raised. Step 2: Assess whether substantial doubt exists. Disclosures. Impact on other accounting matters. Risk assessment and ICFR. Auditor's going concern assessments.
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Going Concern Accounting Standard ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, provides guidance in preparing financial statements. This standard was effective for years ending after December 15, 2016.
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Further, under IFRS Standards, if the company ceases to be a going concern after the reporting date but before its financial statements are authorized for issuance, IAS 10 4 requires a change in the basis of accounting, as opposed to adjustments to the amounts recognized under the going concern basis of accounting. COVID-19 impact on the assessment
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Going concern is an accounting term for a company that is financially stable enough to meet its obligations and continue its business for the foreseeable future. Certain expenses and assets may be...
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Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities.
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In August 2014, FASB issued its accounting standard that addresses management's responsibilities with respect to going concern (Accounting Standards Update (ASU) No. 2014-15).
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Update No. 2014-15—Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern By clicking on the ACCEPT button, you confirm that you have read and understand the FASB Website Terms and Conditions.
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The FASB standard established that there would be going concern issues if it is probable that the entity will not be able to meet its obligations within a year of when financial statements are issued. Disclosures about substantial doubt are different than management use of the going concern basis of accounting.
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Going concern is an accounting assumption that an entity has the resources to continue operating for the foreseeable future. It helps assure key stakeholders that the business has a secure financial future. The FASB issued ASU 2014-15 providing guidance on determining when and how to disclose going concern uncertainties in the financial statements.
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The IFRS Foundation Trustees received a report from Mr Hoogervorst (IASB Chair) and senior technical directors. An update on the operation of the Accounting Standards Advisory Forum (ASAF) was received, and various IASB projects were discussed. IAS 1 — Assessment of going concern (IASB only) 21 Mar 2013
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The going concern principle is the assumption that an entity will remain in business for the foreseeable future. By making this assumption, the accountant is justified in deferring the recognition of certain expenses until a later period.
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6 "Going concern basis" means the accounting basis whereby in the preparation of the financial report the reporting entity is viewed as a going concern, that is, the entity is expected to: (a) be able to pay its debts as and when they fall due; and
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FASB Accounting Standards Update (ASU) 2014-15 changes the disclosure requirements of the going concern concept for organizations with annual periods ending after December 15, 2016. This new standard makes organizational management responsible for assessing going concern internally. Previously, the U.S.
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The period of time that needs to be considered by directors for assessing going concern is not set at a maximum by the accounting standards. However the FRSSE provides that management should disclose in the accounts where the period considered in making its assessment is less than twelve months from the date of the approval of the accounts.
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The U.S. Financial Accounting Standards Board and the IASB have redoubled efforts to complete their major convergence projects by a June 2011 deadline set by the G20 group of leading countries. Now the International Accounting Standards Committee Foundation, which oversees the board, is on the search for the next bean counter in shining armor.
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