Going Concern Assumption A business will continue to operate in the foreseeable

Going concern assumption a business will continue to

This preview shows page 5 - 7 out of 8 pages.

Going Concern Assumption - A business will continue to operate in the foreseeable future (12 months after balance sheet) - Expectation of continuing long enough to meet commitment - liquidation 的时候不使用 这条 Historical Cost Principle - 当时买的多少钱 = Entry value - 什么时候用 historical cost principle: Represents a value at a point in time Results from reciprocal exchange (two-way exchange) Exchange includes outside arm ’s -length party - Initial Recognition For non-financial assets: any laid-down costs (建造成本) (inventory cost of material, labor and overhead) More reliable Fair Value Principle - 卖出去的多少钱 = Exit value - 什么时候用 fair value principle: Non-monetary or barter transactions: asset exchanged for asset Non-monetary, non-reciprocal transactions (no exchange): donations No outside parties - More relevant 3) Presentation/Disclosure Full Disclosure Principle - Include info that relevant to us ers’ decisions Detailed enough Condensed enough More info is not always good ( information overload ) - Disclosure may be made: Within the main body As notes As supplementary info (include MD&A) 6 Financial Reporting Issues 1) Principles-based Approach: - IFRS and ASPE are principles-based
Image of page 5
Relies on application of professional judgement No rule applied every situation 2) Financial Engineering: Legally structuring transactions to meet the company s objectives Objectives too high —— Fraudulent Financial Reporting 7 Balance Sheet 1) Assets: - Current Assets: Assets expected to be converted to cash or used in the business within a year Oder of Liquidity a) Current Asset Non-current asset Ex: Accounts Receivable; Cash; Inventory/Supplies; Trading investment (short term); Notes Receivable; Prepaid Expenses; Accrued Receivable a) Prepaid Expenses a. 花了钱还没享受服务 b) Accrued Revenues a. 有收入还没拿钱也没记录 - Non-Current Assets Not expected within a year Ex: Long-term investment; Property, plant, and equipment; Intangible Assets a) Property, plant, and equipment a. Tangible Assets with long life b. In the order of permeance c. Have depreciation ( Expense account; Land 不贬值 ) d. Accumulated depreciation ( contra asset account ) e. Carrying amount=Cost - Accumulated Depreciation b) Intangible Assets a. Do not have physical substance, represent a privilege b. Have amortization 2) Liabilities - Current Liabilities Obligations that are supposed to be paid within the coming year Ex: Accounts Payable; Accrued Expenses; Notes Payable; Unearned Revenue; Current maturities of long-term debt; Deferred Revenue a) Unearned Revenue a. 挣了钱还没给服务
Image of page 6
Image of page 7

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture