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A concern proposes to discontinue its business from December2023 and decides to dispose off all its plants within a period of 3months. The Balance Sheet as on 31st December, 2023 should continue to indicate the plants at its historical costs as the assets will be disposed off after the Balance Sheet date.?
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A concern proposes to discontinue its business from December2023 and d...
Introduction
In accounting, the treatment of assets, especially in the context of impending disposal, is critical for accurate financial reporting. As the concern proposes to discontinue its business and dispose of its plants after December 31, 2023, the valuation of these assets on the Balance Sheet requires careful consideration.
Historical Cost Principle
- The historical cost principle dictates that assets should be recorded at their original purchase price.
- This principle is adhered to unless there are indications of impairment or a reduced market value.
Balance Sheet Presentation
- On the Balance Sheet as of December 31, 2023, the plants should continue to be recorded at historical costs.
- Since the disposal will occur after the Balance Sheet date, the financial position should reflect the assets as they were at the end of the reporting period.
Implications of Disposal
- Discontinuing operations does not necessitate adjusting the book value of the plants until the actual disposal occurs.
- Reporting at historical costs maintains consistency and reliability in financial statements, essential for stakeholders’ decision-making.
Conclusion
- The Balance Sheet's integrity is upheld by presenting the plants at historical costs, aligning with accounting standards.
- Future disclosures may need to provide additional context regarding the planned disposal to inform stakeholders about the company's operational changes.
By following these guidelines, the concern ensures compliance with accounting principles while providing a clear picture of its financial status as it transitions towards discontinuation.
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A concern proposes to discontinue its business from December2023 and decides to dispose off all its plants within a period of 3months. The Balance Sheet as on 31st December, 2023 should continue to indicate the plants at its historical costs as the assets will be disposed off after the Balance Sheet date.?
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A concern proposes to discontinue its business from December2023 and decides to dispose off all its plants within a period of 3months. The Balance Sheet as on 31st December, 2023 should continue to indicate the plants at its historical costs as the assets will be disposed off after the Balance Sheet date.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about A concern proposes to discontinue its business from December2023 and decides to dispose off all its plants within a period of 3months. The Balance Sheet as on 31st December, 2023 should continue to indicate the plants at its historical costs as the assets will be disposed off after the Balance Sheet date.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A concern proposes to discontinue its business from December2023 and decides to dispose off all its plants within a period of 3months. The Balance Sheet as on 31st December, 2023 should continue to indicate the plants at its historical costs as the assets will be disposed off after the Balance Sheet date.?.
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