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ASC 205, Presentation of Financial Statements

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ASC 205 contains four subtopics, below is an overview of each subtopic.

205-10 Overall
ASC 205-10, prescribes the advantages of presenting comparative financial statements of the entities instead of the single-period financial statements of the entities, and addresses how the comparative information of the entity shall be presented in the financial statement and the required to be disclosure in financial statements.

205-20 Discontinued Operations
ASC 205-20 describes the accounting treatment for components that have been disposed of or are classified as held for sale, and specifically states:

This Subtopic of ASC 205, presentation of financial statements provides direction on when the results of operations of a element of an entity that either has been disposed of or is allocated as held for sale would be reported in the financial statement of the entity as a discontinued operation. ASC 205-20 also exhorts the allocation of overhead and interest to discontinued operations.

205-30 Liquidation Basis of Accounting
ASC 205-30, Liquidation Basis of Accounting was added by ASU 2013-07 as Codification, which is effective for entities that determine liquidation is possible during annual periods beginning after the December 15, 2013, and interim reporting periods therein. ASC 205-30 describe:

The Liquidation Basis of Accounting provides direction on when and how an entity should prepare its financial statements of the entity using the method of liquidation basis of accounting and represent the related disclosures that should be made in the financial statement of the entity.

ASC 205-40 Going Concern
ASC 205-40 assumes that a company will continue as a going concern unless and until the company’s liquidation becomes possible. To continue as a going concern means the company is capable to continue its operating for a period of time that is sufficient to carry out its obligations and commitments.

Company’s management is required to assess whether there are events or/and conditions that raise substantial doubt about the company’s ability to continue as a going concern within one year after the date on which the annual or interim financial statements of the entities are issued. Substantial doubt shall exist when it is probable that the company will be unable to meet the obligations as they become due.

At AJSH, we assist our clients in bookkeeping, payroll, auditing, taxation, secretarial compliances and preparation of financial statements ensuring compliances with applicable standards. If you have any questions or wish to know more about ASC-250, kindly contact us.


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