Non-going-concern basis
Management assesses whether it intends to liquidate the entity or cease trading, or has no realistic alternative to doing so. When the going-concern basis is inappropriate, the entity discloses that fact, the basis used and the reason. Applicable measurement depends on the chosen basis and relevant requirements; it is not a general valuation shortcut for hard-to-value investments. A material uncertainty about going concern does not automatically mean the entity has ceased to be a going concern.
Worked example
A company’s owners resolve to liquidate and there is no realistic alternative to cessation. Management assesses an appropriate non-going-concern basis and discloses the basis and reasons in its financial statements.
Common mistake
Using a so-called break-up basis merely because individual investment fair values are difficult to determine, or switching basis whenever a company has a loss.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Supporting | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |