For an enterprise that does not meet the going concern assumption, how should the financial statements be prepared and presented? HMLF will guide you through the preparation and presentation of the financial statements of these organizations.
1. Principles of preparing financial statements of enterprises operating continuously
– The preparation and presentation of financial statements must comply with the provisions of Accounting Standards “Presentation of Financial Statements”. And other relevant accounting standards. Material information must interpretation for. To help readers properly understand the financial situation of the business.
– Instead of the legal form, the financial statements must reflect the true economic nature of transactions and events.
– The asset does not recognize higher than the recoverable value. Liabilities does not recognize as less than liabilities.
2. Principles of presentation of assets and liabilities
– Assets and liabilities on the balance sheet must present as short-term and long-term. The norms sort by decreasing liquidity.
– Assets or liabilities must have a maturity period not exceeding 12 months. Or a production cycle business as usual. As of the moment the report is classified as short-term.
– Assets and liabilities does not classify as short-term will consider as long-term.
– Reclassify assets and liabilities classified as long-term in the previous period. But there is a remaining maturity period of no more than 12 months. Or a normal production or business cycle. From the time of reporting to short-term.
– Assets and liabilities must be presented separately. Offset is only made when assets and liabilities reach the same object. There is a fast turnaround, short maturity period. Arising from agreements and events of the same kind.
3. Principles of presentation of revenue, income and expenses items in financial statements
– Presenting in accordance with appropriate principles and ensure caution. Statement of business results and statement of cash flows. Reflect the revenue, income, expenses, and cash flow items of the reporting period. If previous periods have errors. Affecting business results and cash flow. It must adjust retroactively, not in the reporting period.
– When preparing consolidated financial statements between enterprises. And subordinate units do not have legal status. Dependent accounting, the balance of internal items of the Balance Sheet. Revenues, expenses, profits, losses that are considered unrealized arising from internal transactions must be excluded.
Harley Miller Law Firm “HMLF”
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