going concern and break up basis

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    xuanguo
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    break-up basis and going concern basis, are they the same?


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    Anonymous
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    IIRC break-up basis is based on net realizable value (eg. company undergoing liquidation will have to prepare its accounts on break up basis), and going concern basis is based on cost/fair value (as per IASs requirements)


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    MikeLittle
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    break up is, literally, the basis you would use if the company were to be broken up ( and sold in pieces ). Going concern is the basis to be used when, literally, the company is a going concern – ie it is likely to last into the foreseeable future with neither the intention nor need to curtail significantly the scale of operations of the enterprise


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    lgopaul
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    When a company is in the stage of winding up, and has prepared its FS on a break-up basis, should any amount receivable/payable from/to related party be waived, or shown on the statement of financial position?
    Does this increase the audit risk?


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    cutemishal
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    The audit risk would only arise if an inappropriate basis were used while preparing financial statements i.e if Co is not a going concern and the Financial statements are prepared on a going concern basis…. If appropriate disclosures are made and true state of the company’s affair is shown then there is no audit risk.
    Correct me if I am wrong.


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    black
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    anyone has mock for p7? :(


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    Anonymous
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    That’s depends the basis of preparing a financial statement on breakup basis.

    IIRC, the assets are all classified as current assets, at the net reliasible value. (Including amount due from related parties)

    non current liabilities are reclassified as current liabilities. (the assumption is that you are going to sell the assets to settle the amount in the foreseeable future).

    I don’t think amount due to/from related parties can be waived just like that.

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