Going concern/subsequent event

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auditman
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Going concern/subsequent event

Post by auditman »

Hi all

The company partners made a resolution to close down the Company in 2022 (January) and entrusted a partner to proceed with the process. the FS period ended 31/12/2021. Until the date of issue of FS 31/08/2022 there has been no actions taken on it (for the closing down of the Company).

The auditors put adverse opinion saying that the assets and liabilities are not at net realizable value even though the details of partners resolution was mentioned in the FS and also mentioned that the corresponding adjustments will be effected subsequently.

Is it an adjusting event to reflect it? Is the auditor right?

Please help!
JRSB
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Re: Going concern/subsequent event

Post by JRSB »

yes because the accounts can't be prepared on a going concern basis
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Marek Muc
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Re: Going concern/subsequent event

Post by Marek Muc »

IAS 10.14-16
auditman
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Re: Going concern/subsequent event

Post by auditman »

Thanks all :D
JRSB
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Re: Going concern/subsequent event

Post by JRSB »

Marek - worth adding to IAS10 page of knowledge base?
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Marek Muc
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Re: Going concern/subsequent event

Post by Marek Muc »

it's mentioned there already 8-)
https://ifrscommunity.com/knowledge-bas ... ng-period/
The only instance when a non-adjusting event impacts figures reported in financial statements is a situation where a would-be non-adjusting event prevents the management from preparing financial statements on a going concern basis (IAS 10.14-16).
Leo
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Re: Going concern/subsequent event

Post by Leo »

Does this mean that, until 31/08/2022, any resolution to close down the company should be recognised accordingly in the FS (discontinued) ?

Also, I don't understand why net realisable value, isn't it related to inventory, what has it to do with closing down of the company ?
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Marek Muc
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Re: Going concern/subsequent event

Post by Marek Muc »

so Leo - on what basis would you measure assets and liabilities if the entity is no longer a going concern?
Leo
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Re: Going concern/subsequent event

Post by Leo »

Fair value less cost to distribute or sell ?
Leo
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Re: Going concern/subsequent event

Post by Leo »

They are the same thing aren't they ?
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Marek Muc
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Re: Going concern/subsequent event

Post by Marek Muc »

no, they aren't the same:

https://ifrscommunity.com/knowledge-bas ... ble-value/
Net realisable value is different from fair value less costs to sell, because NRV is an entity specific value whereas fair value is not
Leo
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Re: Going concern/subsequent event

Post by Leo »

So it applies only to inventories or all assets and liabilities ?
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Marek Muc
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Re: Going concern/subsequent event

Post by Marek Muc »

in what circumstances?
Leo
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Re: Going concern/subsequent event

Post by Leo »

In this circumstance.
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