I prepared accounts for a client in October/November last year on a going concern basis but was asked not to file them in case the company proved not to be a going concern. A sale is currently being negotiated for the business of the company at a significant loss. Should I therefore amend the accounts to a break up basis and how should I value the business when the final figures have not been agreed?
Any suggestions would be gratefully received.
Thank you.
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Company not a going concern
Technically you cannot in the event prepare accounts on a going concern basis. Any other basis ( which is not described by the standard ) is to be used. A break up basis will suffice , you will know what the debtors, cash and creditors postion is, what you may not have is the NRV for any fixed assets and you can then include these at cost as long as this is disclosed.
Ehat you will also need to disclose is the reason for not preparing accounts under going concern and if an audit an emphasis of mater as well.
Trust this helps