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Journal entry — Going concern — FASB to reconsider requiring management assessment

Published on: May 03, 2012

At its meeting yesterday, the FASB tentatively decided to establish a separate project to reconsider whether to develop a requirement for management to assess an entity’s ability to continue as a going concern and asked the FASB staff to prepare a proposal outlining a direction for the new project. Yesterday’s decision reflects a departure from the Board’s earlier decision not to require management to make such assessment or to provide going-concern-type disclosures.

In addition, in response to questions raised about applying the liquidation basis of accounting to limited-life entities, the Board tentatively decided to amend the definition of “imminent” in its proposed Accounting Standards Update (ASU). The Board also reaffirmed its previous tentative decision to expose the proposed ASU for a 90-day comment period.

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