Going concern/subsequent event
Going concern/subsequent event
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!
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!
Re: Going concern/subsequent event
yes because the accounts can't be prepared on a going concern basis
Re: Going concern/subsequent event
IAS 10.14-16
Re: Going concern/subsequent event
Marek - worth adding to IAS10 page of knowledge base?
Re: Going concern/subsequent event
it's mentioned there already
https://ifrscommunity.com/knowledge-bas ... ng-period/
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).
Re: Going concern/subsequent event
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 ?
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 ?
Re: Going concern/subsequent event
so Leo - on what basis would you measure assets and liabilities if the entity is no longer a going concern?
Re: Going concern/subsequent event
Fair value less cost to distribute or sell ?
Re: Going concern/subsequent event
They are the same thing aren't they ?
Re: Going concern/subsequent event
no, they aren't the same:
https://ifrscommunity.com/knowledge-bas ... ble-value/
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
Re: Going concern/subsequent event
So it applies only to inventories or all assets and liabilities ?
Re: Going concern/subsequent event
in what circumstances?
Re: Going concern/subsequent event
In this circumstance.