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Going Concern Principle
Learning outcome: After attempting this activity, students will be able to understand the concept of “Going Concern Principle".
Background: Going concern principle states that the business should be treated as it will continue to operate for an indefinite period. As a business student, it is really important to understand the implications of this concept. Keeping in mind the following scenario you are required to take a stance whether the going concern assumption still follows or not.
Haider Motors Limited (HM) is one of the leading automobile companies in the Pakistan with a market share of 65%. Recently, HM Ltd. has filed a law suit against Ahmad Automobile for patent violation over its 1300 cc engine technology. Ahmad Automobile is comparatively a new company with a market share of only 7%. There is 90% chance that Ahmad Automobile will be out of business after the law suit is settled.
Briefly discuss whether Ahmad Automobile still follows the Going concern assumption? If yes, why? If No, why Not?
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going concern principle ka smjha dyn kindly
simply running a business for indefinite time
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