Evaluation Of Ford Motor Company 's Financial Statements Adherence
The going concern concept is the assumption that an entity prepares financial statement on a going concern under the assumption that the entity will remain in business for the foreseeable future. The entity also will not be forced to liquidate its asset in near future (Or & Raymaker, 2014). Generally, the term foreseeable future indicates a period of 12 months. In the case that an entity may not be going concern due to the fact that the entity has to liquidate its operation, the going concern concept cannot be used in the financial statement. It must be reported differently using others basis. The going concern basis has become an issue during the time of crisis. The responsibility lies on management team to assess its business in order to ensure that an entity will be in business for the foreseeable future (ACCA, 2015).
Based on FASB report, the board issued accounting standard update on August 2014 regarding going concern. As previously, FASB provided insufficient guidance regarding going concern. The new standard stated that “Disclosures are required when conditions give rise to substantial doubt about a company’s ability to continue as a going concern within one year from the financial statement issuance date”. It will apply to all companies and is effective after December 15, 2016 including all annual and interim thereafter (Or & Raymaker, 2014).
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