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Hi,
I just want to check if my understanding is correct, when it states:
ability to continue as a going concern – the company might survive the 12 months from the statement of financial position.
ability to not continue as a going concern – the company might not survive the 12 months from the statement of financial position.
Thanks
Ability to continue as a going concern means…
Co is able to continue its operational existence for foreseeable future usually 12 months…It’s usually 12 months from the date the FS are approved; should not be less than 12 months from date of FS.
If the business is a going concern there are really no doubts that it will survive for that period.
If there are doubts, then there should be a note in the FS explaining that and usually an emphasis of matter paragraph in the audit report. FS are produced on going concern basis
If there is no realistic prospect of survival, the FS should be drawn up on a break-up basis.
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