The financial controller of Kantanka Ltd,(Kantanka) a technology company has asked you, a trainee financial accountant within the company for an explanation of some accounting terminologies and, for advice on how to account for various transactions that occurred after the financial year end date of 31 December 2016.
Required:
Explain TWO (2) reasons why a company would not prepare its financial statements on a going concern basis. (4 marks)
View Solution
Per paragraph 14 of IAS 10, a company would not prepare its financial statements on a going concern basis if management determines after the reporting period either that
- it intends to liquidate the company or
- to cease trading or that it has no realistic alternative but to do so.