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Events after the Balance Sheet Date IAS 10 is the standard is for events, which could be favourable or unfavourable, that occur between the balance sheet date and the date that the financial statements are authorised for issue. There are two main sorts of events”
The ‘going concern’ assumption is that at the balance sheet date, it is generally assumed that the business will continue operations in the future and the financial statements are prepared on this basis. Where there is no going concern assumption, assets have to be valued at their net recoverable value. Accounting Treatment
Going Concern Issues Arising After Balance Sheet Date An entity shall not prepare its financial statements on a going concern basis if management determines after the balance sheet date either that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so. Disclosure Non-adjusting events should be disclosed if they are so significant that non-disclosure would affect the proper evaluation and analysis of the financial statements. The required disclosure is
A company should update disclosures that relate to conditions that existed at the balance sheet date to reflect any new information that it receives after the balance sheet date about those conditions. Companies must disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the enterprise's owners or others have the power to amend the financial statements after issuance, the enterprise must disclose that fact. Relevance for Diamond Companies A theoretical existing sightholder, who relies on the supply from the DTC for the majority of its rough, and without which the company might not be a ‘going concern’. The company was notified on 17th December that its contract would be renewed in April 2008. If during the forensic accounting review, issues arose that caused the DTC to notify the sightholder that its contract will not be renewed in April 2008, then this would be a post balance sheet event that challenges the going concern assumption. |
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