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CMA Intermediate · Corporate Accounting and Auditing · Events after the Reporting Period (Ind AS 10)

After 31 March 2027, Ganga Pharma Ltd's operating results deteriorated sharply during April 2027. Management is aware of material uncertainties that may cast significant doubt on the company's ability to continue as a going concern, but has not decided to liquidate or cease trading. Which treatment is consistent with Ind AS 10 read with Ind AS 1?

Prepare the statements on a going concern basis and disclose the material uncertainties. Events or conditions that cast significant doubt may arise after the reporting period and require disclosure, but the basis changes only if management intends to liquidate or has no realistic alternative.

  1. APrepare on a going concern basis and disclose the material uncertaintiesCorrect
  2. BAbandon the going concern basis automatically because results deteriorated
  3. CIgnore the uncertainties because they arose after the reporting period
  4. DAdjust asset values to liquidation values in the 31 March 2027 balance sheet

Explanation

Deterioration after the period may indicate a need to consider the going concern assumption, but liquidation or cessation has not been determined. Ind AS 1 requires disclosure of material uncertainties, and the events may arise after the reporting period. Abandoning going concern is required only if the assumption is no longer appropriate.

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