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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.

 

Requirement:

Briefly discuss whether Ahmad Automobile still follows the Going concern assumption? If yes, why? If No, why Not?

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Replies to This Discussion

solution please

Breaking down liquidity position of an organization not upheld by adequate financing arrangements.High monetary hazard emerging from expanded adapting level rendering the organization defenseless against delays in installment of intrigue and credit principle.Significant exchanging misfortunes being brought about for quite a while. Gainfulness of an organization is fundamental for its survival in the long term.Aggressive development system not upheld by adequate back which eventually prompts over trading.Increasing level of here and now getting and overdraft not bolstered by increment in business. Powerlessness of the organization to keep up liquidity proportions as characterized in the advance covenants.Serious prosecutions looked by an organization which does not have the money related quality to pay the conceivable settlement.Inability of an organization to build up another scope of financially effective items. Advancement is frequently said to be the way to the long haul solidness of any organization

going concern principle ka smjha dyn kindly

simply running a business for indefinite time

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