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Kim Smith.
Kim Smith.-
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Noah098
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“The loan has a minimum profit target covenant. If this is breached, the loan would be instantly repayable.
There is a risk the liability is incorrectly ALLOCATED as a non?current liability rather than a current liability if the covenant is breached.
If the company does not have sufficient cash flow to meet this loan repayment, then there could be going concern implications.
There is a risk of inadequate disclosure of going concern issues.”maam its a trivial doubt, but is it wrong to use the word “Classify” instead of “allocate” ?
Kim Smith
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Looking at the descriptions of assertions on page 86 the corrected word for the avoidance of any doubt would be PRESENTED. I don’t think a student would be penalised for using any alternative as long as it is clear that it is the current/non-current distinction that is the issue.
Noah098
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