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Going Concern Concept
The enterprise will continue in operation long enough to carry
out its existing objectives. It means that the entity will remain
in operation for the foreseeable future.
Most firm resources such as supplies, land, buildings and
equipment are acquired to use rather than to sell.
Example:
The company purchases a car with a cost of RM20,000 with
the estimated useful life for 10 years . The market value for
that car is RM25,000. It is suggested that the car should be
depreciated for 5 years because the business is expected to
make a clearance in a short period.
Conclusion :
The suggestion is rejected because it is contra with the Going
Concern Concept. The vehicle should be recorded as the
value of RM20,000 and must be depreciated for 10 years
because the trade must be assumed to operate for the period
that cannot be expected.
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