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Unformatted text preview: Case 12.4: Surfer Dude Duds, I nc.: Considering the Going- Concern Assumption 1. What are Mark's options? Mark has several options first; he can demand that George disclose the plans about how the company is going to continue for the next year. These plans need to be disclosed in the financial statements. Next, if the going concern issue is not resolved to the satisfaction of Mark then he should ask George to give a note in the financial statements that discloses the matters that raise doubts about the going concern assumption. If the disclosures are adequate, then George should give an unqualified opinion but should add a paragraph that draws attention to the note in the financial statements. Lastly, if George refuses to make a sufficient disclosure in the financial statement, Mark has to express either a qualified or an adverse opinion. Whether it will be a qualified opinion or an adverse opinion will depend on the results of additional procedures carried out by Mark to examine the evidence relating to going concern assumptions. 2. How might a going-concern explanatory paragraph become a &quot;self-fulfilling prophecy&quot; for Surfer Dude?...
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This note was uploaded on 02/22/2011 for the course ACCT 492 taught by Professor Urdank during the Fall '10 term at University of Phoenix.
- Fall '10