IBIS Technology Corporation - Essay Example

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IBIS Technology Corporation

During the course of an audit, it is a requirement that the auditors take into consideration the appropriateness of management’s use of the going concern assumption in the preparation of the financial statements. The going concern assumption is a fundamental assumption in the preparation of financial statements. Going concern assumes that the business will continue in operation for the foreseeable future with no intention to liquidate. This type of qualified opinion suggests that the possibility exists that the organization may not be operational in the foreseeable future. It indicates that there are a number of factors that could give rise to this including declining sales and profits or increasing losses. This is also an indication that an organization may not be able to honor its obligations as they fall due if it cannot generate the level of revenues necessary to do cover its costs and leave some in reserves. Additionally, if an organization continues to make losses thereby eroding reserves it may not be able to carry out any major investments or any projects in the form of research and development. In a case where an organization is no longer a going concern, the organization’s noncurrent (fixed) assets are valued at the price they are likely to fetch in a forced sale and their current assets such as stock and debtors will also be discounted to the price they are likely to fetch in a liquidation. This value will be substantially less than the values in the books which assume that the organization is a going concern. ...
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The present essay dwells on the financial problems of the IBIS Technology Corporation. Reportedly, Ibis Technology Corporation is in the business of developing and marketing Separation by Implantation of Oxygen – a form of silicon-on-insulator technology for the global semiconductor industry. …
Author : hollisblock

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