I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART B: THE QUALITATIVE CHARACTERISTICS OF FINANCIAL INFORMATION 

 

34

 

QUESTION  

 

 

Going concern

 

A retailer commences business on 1 January and buys inventory of 20 washing machines, each costing 

$100. During the year they sell 17 machines at $150 each. How should the remaining machines be 

valued at 31 December in the following circumstances? 

A 

They are forced to close down their business at the end of the year and the remaining machines 

will realise only $60 each in a forced sale. 

B 

They intend to continue their business into the next year.