The going concern assumption supports the reporting of plant assets at book value rather than market value.

Question

Quizplus · Accepted Answer

The going concern assumption assumes that a company will continue operating in the foreseeable future, which means that the plant assets will be used to generate revenue and will continue to be necessary for the company's operations. Therefore, reporting the plant assets at book value (historical cost less accumulated depreciation) is appropriate and consistent with the going concern assumption. Reporting at market value would be more appropriate if the company was going out of business, but that would not be consistent with the going concern assumption.

The Going Concern Assumption Supports the Reporting of Plant Assets