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Going Concern
23. When preparing
financial statements, management shall make an assessment
of an entity’s ability to continue as a going concern.
Financial statements shall be prepared on a going
concern basis unless management either intends
to liquidate the entity or to cease trading, or
has no realistic alternative but to do so. When management
is aware, in making its assessment, of material uncertainties
related to events or conditions that may cast significant
doubt upon the entity’s ability to continue as a going
concern, those uncertainties shall be disclosed. When
financial statements are not prepared on a going
concern basis, that fact shall be disclosed,
together with the basis on which the financial statements
are prepared and the reason why the entity is not regarded
as a going concern.
24. In assessing
whether the going concern assumption is appropriate,
management takes into account all available information about
the future, which is at least, but is not limited to, twelve
months from the balance sheet date. The degree of
consideration depends on the facts in each case. When an
entity has a history of profitable operations and ready access
to financial resources, a conclusion that the going concern
basis of accounting is appropriate may be reached without
detailed analysis. In other cases, management may need to
consider a wide range of factors relating to current and
expected profitability, debt repayment schedules and potential
sources of replacement financing before it can satisfy itself
that the going concern basis is appropriate.
Accrual Basis of
Accounting
25. An entity shall
prepare its financial statements, except for cash flow
information, using the accrual basis of accounting.
26. When the accrual
basis of accounting is used, items are recognised as assets,
liabilities, equity, income and expenses (the elements of
financial statements) when they satisfy the definitions and
recognition criteria for those elements in the Framework.
Consistency of
Presentation
27. The presentation
and classification of items in the financial statements
shall be retained from one period to the next unless:
(a) it is apparent,
following a significant change in the nature of the
entity’s operations or a review of its financial statements,
that another presentation or classification would be
more appropriate having regard to the criteria
for the selection and application of accounting
policies in IAS 8; or
(b) a Standard or an
Interpretation requires a change in presentation.
28. A significant
acquisition or disposal, or a review of the presentation of
the financial statements, might suggest that the financial
statements need to be presented differently. An entity changes
the presentation of its financial statements only if the
changed presentation provides information that is reliable and
is more relevant to users of the financial statements and the
revised structure is likely to continue, so that comparability
is not impaired. When making such changes in presentation, an
entity reclassifies its comparative information in accordance
with paragraphs 38 and 39.
Materiality and
Aggregation
29. Each material
class of similar items shall be presented separately in
the financial statements. Items of a dissimilar nature
or function shall be presented separately unless
they are immaterial.
30. Financial
statements result from processing large numbers of
transactions or other events that are aggregated into classes
according to their nature or function. The final stage in the
process of aggregation and classification is the presentation
of condensed and classified data, which form line items on the
face of the balance sheet, income statement, statement of
changes in equity and cash flow statement, or in the notes. If
a line item is not individually material, it is aggregated
with other items either on the face of those statements or in
the notes. An item that is not sufficiently material to
warrant separate presentation on the face of those statements
may nevertheless be sufficiently material for it to be
presented separately in the notes.
31. Applying the
concept of materiality means that a specific disclosure
requirement in a Standard or an Interpretation need not be
satisfied if the information is not material.
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