Help with unit 1 accounting question

[zazzlemay]

Phil Horner has been concerned about the future of his business for a few years. As he isn't sure that he will keep trading in the future, he has valued his assets based on what he thinks he could get for them if the business closed today.

a. Which accounting assumption has Horner breached? What should he have done with his assets?
b. Has Horner also breached a qualitative characteristic of accounting? Explain your answer.

I was thinking of the going concern assumption for a. but other than just the background of the question I have no idea how he's breaching it. I also don't know what he should have done with his assets and for b I was thinking faithful representation and timeliness? I can explain the faithful representation breaching but I don't understand the question enough to really say if he's also breached timeliness (I'm assuming he's using the current asset value for future applications but I'm most probably wrong)

Thanks in advance

[cotangent]

Phil Horner has been concerned about the future of his business for a few years. As he isn't sure that he will keep trading in the future, he has valued his assets based on what he thinks he could get for them if the business closed today.

a. Which accounting assumption has Horner breached? What should he have done with his assets?
b. Has Horner also breached a qualitative characteristic of accounting? Explain your answer.

I was thinking of the going concern assumption for a. but other than just the background of the question I have no idea how he's breaching it. I also don't know what he should have done with his assets and for b I was thinking faithful representation and timeliness? I can explain the faithful representation breaching but I don't understand the question enough to really say if he's also breached timeliness (I'm assuming he's using the current asset value for future applications but I'm most probably wrong)

Thanks in advance

a) Going concern is breached as the business is valuing its assets on the basis that it will not continue to operate in the future. This will not accurately represent the value of the assets. He must record all his assets with the values verified by their respective source documents.
b) Breaches verifiability since there is no evidence for the valuation of assets and this leads to inaccurate recording. I dont think we can relate this to timeliness since timeliness is about having information ahead of time to make valuable decisions. and yeh, faithful rep is breached as well. And u can say breaches relevance as his decision making would be negatively impacted by this.

I am not too sure about the timeliness thing. Hope this helps somewhat lol

[zazzlemay]

a) Going concern is breached as the business is valuing its assets on the basis that it will not continue to operate in the future. This will not accurately represent the value of the assets. He must record all his assets with the values verified by their respective source documents.
b) Breaches verifiability since there is no evidence for the valuation of assets and this leads to inaccurate recording. I dont think we can relate this to timeliness since timeliness is about having information ahead of time to make valuable decisions. and yeh, faithful rep is breached as well. And u can say breaches relevance as his decision making would be negatively impacted by this.

I am not too sure about the timeliness thing. Hope this helps somewhat lol

Wow, this was really helpful and made the question so much clearer. I'd have never thought about verifiability but it definitely makes sense now that you've explained it. Thanks for taking the time to answer and huge congratulations on the 45!!!

[cotangent]

Wow, this was really helpful and made the question so much clearer. I'd have never thought about verifiability but it definitely makes sense now that you've explained it. Thanks for taking the time to answer and huge congratulations on the 45!!!

No worries, thanks  don't worry if u don't get the assumptions and characteristics part of accounting straight away. Everyone struggles with it. I remember I was so lost since we had to adjust to the new study design in 3&4. You have plenty of time, so keep practicing. Good luck!