Going concern note!

ademoore Registered Posts: 146 ? ? ?
I have a client i am just finalising accounts for, and they have a negative balance sheet. First year of trading saw a high volume of expenditure in R&D, and a major creditor waiting to be paid.
Year 2 has completely turned around, and I have no concerns about their "going concern", but because of the negative balance sheet, really need a note in yr 1 accounts.

Struggling to put something together - any thoughts on this?

"Notwithstanding the deficit of assets at the balance sheet date these financial statements have been prepared on the going concern basis, on the basis that the director (and sole shareholder) has sought further financial support via the company's bankers as well as signing contracted sales with a new major reseller in the United States. The first year of trading has seen high costs in establishing the company's products, and it now expects to reap the benefit of high margin sales on those products in the current and future years such that the deficit of assets at the balance sheet date will be extinguished by profitable trading thereafter. Consequently no adjustments have been made to the financial sttements which might arise if the going concern basis were found not to apply."

Thank you!


  • PGM
    PGM Registered Posts: 1,954
    Sounds good, maybe some weasel words;

    "The Initial debts for development have caused a balance sheet deficit, this has been generated for anticipation future revenues, which have now been realised."
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