15.3.3. Going Concern Concept

Try these first

1. 1.

   What does the Going Concern Concept assume about a business?

   Hint

   Think about the future of the business.

2. 2.

   How does the Going Concern Concept affect asset valuation?

   Hint

   Consider what happens when a business is about to shut down.

3. 3.

   What does the Going Concern Concept assume?

   • The business will close soon
   • The business will continue indefinitely
   • Assets will be liquidated

   Hint

   Think about how long the business is expected to operate.

4. 4.

   True or False: If a business is no longer considered a going concern, its assets should be valued at market prices.

   • True
   • False

   Hint

   Consider what liquidation means.

5. 5.

   Analyze a case where Company A has a solid profit record but is facing increasing competition that threatens its market position. How should its management approach the Going Concern Concept?

   Hint

   Consider what management should communicate to stakeholders.

6. 6.

   Create a financial summary for a fictional company that was once a going concern but is now facing liquidation due to debts. Discuss how their balance sheet would change.

   Hint

   Focus on the disparities between traditional accounting and a liquidation scenario.