10 Facts About Going concern

Going concern is a business that is assumed will meet its financial obligations when they become due.

The presumption of going concern for the business implies the basic declaration of intention to keep operating its activities at least for the next year, which is a basic assumption for preparing financial statements that comprehend the conceptual framework of the IFRS.

Continuation of an entity as a going concern is presumed as the basis for financial reporting unless and until the entity's liquidation becomes imminent.

Going concern assumption is universally understood and accepted by accounting professionals; however, it has never been formally incorporated into U S GAAP.

Going concern principle allows the company to defer some of its prepaid expenses until future accounting periods.

The going concern assumption is a fundamental assumption in the preparation of financial statements.

Accordingly, unless the going concern assumption is inappropriate in the circumstances of the entity, assets and liabilities are recorded on the basis that the entity will be able to realize its assets, discharge its liabilities, and obtain refinancing in the normal course of business.

Going concern concept is not clearly defined anywhere in generally accepted accounting principles, and so is subject to a considerable amount of interpretation regarding when an entity should report it.

Continuation of an entity as a going concern is assumed in financial reporting in the absence of significant information to the contrary.

Ordinarily, information that significantly contradicts the going concern assumption relates to the entity's inability to continue to meet its obligations as they become due without substantial disposition of assets outside the ordinary course of business, restructuring of debt, externally forced revisions of its operations, or similar actions.