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What is the scope of Going Concern as per ICDS I.

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Dated: 8-9-2017

Manual - ICDS I : Accounting Policies

“Going concern” refers to an assumption that the person has neither the intention nor the necessity of liquidation or  curtailing, materially the scale of the business, profession or vocation and intends to continue his business, profession or vocation for the foreseeable future. As financial statements are a periodic reflection of the entity’s status, computation of total income is also a periodic evaluation of the assessee’s income.

Material uncertainties may cast doubt upon the ability of an assessee to continue as a going concern. An assessee is assumed to be a going concern in the absence of information to the contrary.

The ICDS however does not provide specific guidance as to the manner of computation in the event that the assumption of going concern is not met.  The Framework for the Preparation and Presentation of Financial Statements issued by the ICAI states that if the assumption of going concern is impinged, then the financial statements have to be prepared on a ‘different basis’. In the absence of specific mandate in this ICDS, an assessee may rely upon this treatment prescribed by the Framework of Financial Statements issued by ICAI.

 

 
 
 
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