{"id":51916,"date":"2024-04-15T23:31:41","date_gmt":"2024-04-15T23:31:41","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=51916"},"modified":"2024-04-15T23:31:41","modified_gmt":"2024-04-15T23:31:41","slug":"statement-i-if-the-going-concern-concept-is-no-longer-valid-then-all-prepaid-assets-would-be-completely-written-off-immediately-statement-ii-also-land-held-as-an-investment-would-be-valued-at-its-re","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/statement-i-if-the-going-concern-concept-is-no-longer-valid-then-all-prepaid-assets-would-be-completely-written-off-immediately-statement-ii-also-land-held-as-an-investment-would-be-valued-at-its-re\/","title":{"rendered":"Statement I If the going concern concept is no longer valid, then all prepaid assets would be completely written-off immediately. Statement II Also land held as an investment would be valued at its realisable value."},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a97a2a8b164a\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    Both statements are correct                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    Both statements are incorrect                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"true\">\r\n                    Statement I is correct, but Statement II is incorrect                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    Statement I is incorrect, but Statement II is correct                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>C. Statement I is correct, but Statement II is incorrect.<\/strong><\/p>\n<p>The going concern concept is a fundamental accounting principle that assumes that an entity will continue to operate for the foreseeable future. If this concept is no longer valid, then the entity&#8217;s assets and liabilities must be revalued to reflect their fair values. This may result in the complete write-off of prepaid assets, as they may no longer have any value to the entity.<\/p>\n<p>However, land held as an investment is not a current asset and is not subject to the same valuation requirements as current assets. Therefore, even if the going concern concept is no longer valid, land held as an investment would not be written off immediately. Instead, it would be valued at its fair value, which may be different from its historical cost.<\/p>\n<p>Here is a more detailed explanation of each statement:<\/p>\n<p>Statement I: If the going concern concept is no longer valid, then all prepaid assets would be completely written-off immediately.<\/p>\n<p>This statement is correct. If the going concern concept is no longer valid, then the entity&#8217;s assets and liabilities must be revalued to reflect their fair values. This may result in the complete write-off of prepaid assets, as they may no longer have any value to the entity.<\/p>\n<p>For example, if an entity has prepaid rent for the next year, but it is no longer expected to continue operating for the next year, then the prepaid rent would be written off immediately. This is because the entity would no longer be able to benefit from the use of the rented property.<\/p>\n<p>Statement II: Also land held as an investment would be valued at its realisable value.<\/p>\n<p>This statement is incorrect. Land held as an investment is not a current asset and is not subject to the same valuation requirements as current assets. Therefore, even if the going concern concept is no longer valid, land held as an investment would not be written off immediately. Instead, it would be <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> valued at its fair value, which may be different from its historical cost.<\/p>\n<p>For example, if an entity owns land that it has been holding as an investment for several years, <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> and the fair value of the land has increased significantly, then the entity would not be required to write off the land. Instead, it would be required to recognize the increase in the fair value of the land as an unrealized gain in its income statement.<\/p>\n<p>In conclusion, Statement I is correct, but Statement II is incorrect.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Statement I If the going concern concept is no longer valid, then all prepaid assets would be completely written-off immediately. 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