Closely Held Firms as Going Concerns
21 Pages Posted: 16 May 2001
Date Written: March 2001
The current definition of a "going concern" according to GAAP does not take into consideration whether an on-going business exists that is separate or separable from its owner/manager in a closely-held firm or is merely an extension of the individual as an entity. In this study, we propose two criteria that would facilitate making this financing decision as it creates a relevant distinction for potential creditors. Finally, we also recommend that a going concern qualification be reinstated in the attestation process to motivate implementing this new definition for small, closely-held firms.
JEL Classification: M41, M49
Suggested Citation: Suggested Citation