Entity's ability to continue as an going concern Research Paper

Entity's ability to continue as an going concern - Research Paper Example The company will have to settle its dues by selling off all tangible assets. Intangible assets become worthless then (â€Å"The Going Concern Principle†). Going concerns are the only type of entities that can secure loans from banks and other institutions. Investors will only be interested to invest in a business that is expected to run for a long time in the future. A going concern is based on the idea that by continuing its operations in the business, a firm can yield the money that has been invested in the assets. In this way, profits will be generated and dues will be settled. It is important for a company to realize importance of the going concern concept in business and include this aspect in annual reports and statements (Hanif 3.3). Therefore, the objective of this research is to identify what a going concern is and ways in which an organization can effectively decide whether it is a going concern or not. The research is done on the basis of data provided by the International Financial Reporting Standards (IFRS) on the subject matter of going concern. Certain guidelines issued by the Generally Accepted Accounting Principles (GAAP) have also been referred to. Based on information collected, analysis was done with the help of books written by various authors as well as online resources. The analysis was designed in a manner so as to understand; the meaning of going concern; the different ways in which a firm can identify whether it is a going concern or not; the advantages of being a going concern; and the uncertainties that renders a firm as not a going concern. This research involves primary analysis of data based on qualitative method and rationale. The research is done on the basis of guidelines laid down by IFRS and GAAP standards. The IFRS and GAAP standards are considered in order to ensure whether a company can be regarded as a going concern or not. It is necessary to study a company on the following parameters (â€Å"Going