One of the underlying assumptions of the accounting model is the going concern assumption. When this assumption is questionable, valuation methods used for assets and liabilities may differ from those used when the assumption is viable. For each of the following situations, identify the measurement attribute that would most likely be used if the company is not likely to remain a going concern.
1. Plant and equipment are carried at an amortized cost on a straight-line basis of $1,500,000.
2. Bonds with a maturity price of $2,000,000 and interest in arrears of $500,000 are reported as a noncurrent liability.
3. Accounts receivable are carried at $700,000, the gross amount charged for sales. No allowance for doubtful accounts is reported.
4. The reported LIFO cost of inventory is $300,000.
5. Investments in a subsidiary company are recorded at initial cost plus undistributed profits.

  • CreatedApril 07, 2012
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