Going concern: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Expand. Sources: linked pages.)
imported>Doug Williamson
(Add link to Double entry page.)
Line 32: Line 32:


== See also ==
== See also ==
* [[Total Loss Absorbing Capacity]]
* [[Accounting concepts]]
* [[Accounting concepts]]
* [[Accruals concept]]
* [[Accruals concept]]
Line 41: Line 40:
* [[Discontinuance]]
* [[Discontinuance]]
* [[Discontinuance method]]
* [[Discontinuance method]]
* [[Double entry]]
* [[Gone concern]]
* [[Gone concern]]
* [[Headroom]]
* [[Headroom]]
* [[Liquidation value]]
* [[Liquidation value]]
* [[Total Loss Absorbing Capacity]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]

Revision as of 18:07, 10 February 2017

1.

A going concern is an entity which is commercially viable, able to pay its obligations as they fall due, and whose owners (or other controllers) intend it to continue in operation for the foreseeable future.


The going concern concept is important in bank prudential regulation and capital requirements.

To be fully effective as loss absorbing capacity, capital should absorb losses at the stage when the entity is still a going concern (and not yet a 'gone concern').


2.

The going concern basis of accounting requires that the accounts are prepared using the assumption that the business will continue in operation for the foreseeable future (more than 12 months) and that there is neither the aim nor need to liquidate or limit significantly the nature of the operations.


3.

More generally, a basis of valuing a business on the assumption that it will continue in operation.

Such a valuation may be made for accounting purposes or for other purposes.


4.

Pensions.

The assumption that a pension scheme continues without being discontinued.

Going concern valuations are made on such a basis.


See also