Search within this section
Select a section below and enter your search term, or to search all click Bankruptcies and liquidations
Favorited Content
7.5 Liquidation basis of accounting disclosures
Publication date: 31 Jul 2023
us Bankruptcy & liquidation guide
In the period in which a reporting entity adopts the liquidation basis of accounting (discussed in BLG 6), it should consider the following disclosures described in ASC 205-30-50:
- An indication that the financial statements are prepared using the liquidation basis of accounting, including the facts and circumstances surrounding the adoption of the liquidation basis and a description of how the reporting entity determined that its liquidation was imminent
- A description of the reporting entity’s plan for liquidation, including a description of the manner in which it expects to dispose of its assets and settle its liabilities, and the expected date by which it expects to complete its liquidation
- The methods and significant assumptions used to measure its assets and liabilities, including any changes to such methods and assumptions
- If applicable, the type and amount of costs and income in the statement of net assets in liquidation and the period over which those costs are expected to be paid or income is expected to be earned
In addition to these required disclosures, a reporting entity that has adopted the liquidation basis of accounting should continue to make all other disclosures required by other GAAP that are relevant to its financial statements.
Since the liquidation basis of accounting represents generally accepted accounting principles for entities in liquidation, it is inappropriate to refer to the adoption of the liquidation basis as a change "from generally accepted accounting principles to the liquidation basis of accounting." It is, however, appropriate to highlight in the footnotes that the basis of presentation has changed from a going concern basis to the liquidation basis of accounting.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
Link copied
