# ASC 205-40-55: Presentation of Financial Statements — Going Concern — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/205/40/#55-implementation-guidance-and-illustrations) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T22:54:23.248Z to 2026-09-09T22:54:23.248Z Record version: sha256:8814a193fe23fec38656795482cf9733d40327c2d4aa04106329f765a80adc2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 205-40-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/205/40/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [205-40-55-1](https://asc.understandingaccounting.org/asc/205/40/#205-40-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T22:54:23.248Z to 2026-09-09T22:54:23.248Z Record version: sha256:01f53bb76554b706ec70a1cce85c93a34b752f5bb633c570139ce1c49c458ccb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following flowchart depicts the decision process to follow for evaluating whether there is substantial doubt about an entity's ability to continue as a going concern and determining related disclosure requirements. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-03959127-76AB-449E-B631-B983D521E9C3-low.gif) No "Are the criteria met for the liquidation basis of accounting? (Subtopic 205-30)" "Are there conditions or events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date the financial statements are issued (or available to be issued)? (paragraphs 205-40-50-01 through 50-5)" "An entity shall disclose information to help users understand the following when substantial doubt is alleviated by management's plans: 1. Principal conditions or events that raised substantial doubt, before consideration of management's plans 2. Management's evaluation of the significance of those conditions or events 3. Management's plans that alleviated substantial doubt. (paragraph 205-40-50-12)" Apply the liquidation basis of accounting. (Subtopic 205-30) "No disclosures are required specific to going concern uncertainties under Subtopic 205-40. See Topics 275 and 450 for other disclosures about risks, uncertainties, and contingencies, as applicable." "Is it probable that management's plans will be effectively implemented? (paragraphs 205-40-50-7 through 50-8)" Yes No No Yes Yes Start "An entity shall disclose information to help users understand the following when substantial doubt is not alleviated: 1. Principal conditions or events that raise substantial doubt 2. Management's evaluation of the significance of those conditions or events 3. Management's plans that are intended to mitigate the conditions or events that raise substantial doubt. The entity also should include in the footnotes a statement indicating that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). (paragraph 205-40-50-13)" No "Consider management's plans intended to mitigate the adverse conditions or events. (paragraphs 205-40-50-6 through 50-11)" "Is it probable that management's plans will mitigate the relevant conditions or events that raise substantial doubt? (paragraph 205-40-50-10)" Yes ##### [205-40-55-2](https://asc.understandingaccounting.org/asc/205/40/#205-40-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T22:54:23.248Z to 2026-09-09T22:54:23.248Z Record version: sha256:ab24eb4a3d0d349922ab31ac84f328e52ab94153dbe845f580d4e172f5e4ae6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of adverse conditions and events that may raise [substantial doubt about an entity's ability to continue as a going concern](https://asc.understandingaccounting.org/glossary/s/#substantial-doubt-about-an-entity-s-ability-to-continue-as-a-going-concern "Substantial doubt about an entity's ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The term probable is used consistently with its use in Topic 450 on contingencies."). The examples are not all-inclusive. The existence of one or more of these conditions or events does not determine that there is substantial doubt about an entity's ability to continue as a going concern. Similarly, the absence of those conditions or events does not determine that there is no substantial doubt about an entity's ability to continue as a going concern. Determining whether there is substantial doubt depends on an assessment of relevant conditions and events, in the aggregate, that are known and reasonably knowable at the date that the [financial statements are issued](https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-issued "Financial statements are considered issued when they are widely distributed to shareholders and other financial statement users for general use and reliance in a form and format that complies with GAAP. (U.S. Securities and Exchange Commission [SEC] registrants also are required to consider the guidance in paragraph 855-10-S99-2.)") (or at the date the [financial statements are available to be issued](https://asc.understandingaccounting.org/glossary/f/#financial-statements-are-available-to-be-issued "Financial statements are considered available to be issued when they are complete in a form and format that complies with GAAP and all approvals necessary for issuance have been obtained, for example, from management, the board of directors, and/or significant shareholders. The process involved in creating and distributing the financial statements will vary depending on an entity's management and corporate governance structure as well as statutory and regulatory requirements.") when applicable). An entity should weigh the likelihood and magnitude of the potential effects of the relevant conditions and events, and consider their anticipated timing. 1. a Negative financial trends, for example, recurring operating losses, working capital deficiencies, negative cash flows from operating activities, and other adverse key financial ratios 2. b Other indications of possible financial difficulties, for example, default on loans or similar agreements, arrearages in dividends, denial of usual trade credit from suppliers, a need to restructure debt to avoid default, noncompliance with statutory capital requirements, and a need to seek new sources or methods of financing or to dispose of substantial assets 3. c Internal matters, for example, work stoppages or other labor difficulties, substantial dependence on the success of a particular project, uneconomic long-term commitments, and a need to significantly revise operations 4. d External matters, for example, legal proceedings, legislation, or similar matters that might jeopardize the entity's ability to operate; loss of a key franchise, license, or patent; loss of a principal customer or supplier; and an uninsured or underinsured catastrophe such as a hurricane, tornado, earthquake, or flood. ##### [205-40-55-3](https://asc.understandingaccounting.org/asc/205/40/#205-40-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T22:54:23.248Z to 2026-09-09T22:54:23.248Z Record version: sha256:0d62a809111bc451f85767c777d9426c631f8f79de5721054260b53e5f556eef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are examples of plans that management may implement to mitigate conditions or events that raise substantial doubt about an entity's ability to continue as a going concern. The examples are not all-inclusive. Below each example is a list of the types of information that management should consider at the date that the financial statements are issued in evaluating the feasibility of the plans to determine whether it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the plan will be effectively implemented within one year after the date that the financial statements are issued. 1. a Plans to dispose of an asset or business: 1. 1 Restrictions on disposal of an asset or business, such as covenants that limit those transactions in loan or similar agreements, or encumbrances against the asset or business 2. 2 Marketability of the asset or business that management plans to sell 3. 3 Possible direct or indirect effects of disposal of the asset or business 2. b Plans to borrow money or restructure debt: 1. 1 Availability and terms of new debt financing, or availability and terms of existing debt refinancing, such as term debt, lines of credit, or arrangements for factoring receivables or sale and leaseback of assets 2. 2 Existing or committed arrangements to restructure or subordinate debt or to guarantee loans to the entity 3. 3 Possible effects on management's borrowing plans of existing restrictions on additional borrowing or the sufficiency of available collateral 3. c Plans to reduce or delay expenditures: 1. 1 Feasibility of plans to reduce overhead or administrative expenditures, to postpone maintenance or research and development projects, or to lease rather than purchase assets 2. 2 Possible direct or indirect effects on the entity and its cash flows of reduced or delayed expenditures 4. d Plans to increase ownership equity: 1. 1 Feasibility of plans to increase ownership equity, including existing or committed arrangements to raise additional capital 2. 2 Existing or committed arrangements to reduce current dividend requirements or to accelerate cash infusions from affiliates or other investors.