Fortführungseinheit

Fortführungseinheit is a German term that translates to "continuation unit" or "going concern" in English. It refers to a business entity that is assumed to continue its operations indefinitely into the future, without any intention or necessity of liquidation or significant curtailment of its operations. This assumption is fundamental to the principles of accounting and financial reporting.

The concept of a Fortführungseinheit underpins the valuation of assets and liabilities on a company's balance sheet. Assets are typically recorded at their historical cost or fair value, and their value is considered in the context of their continued use within the business. Similarly, liabilities are recognized based on the expectation that the company will be able to meet its obligations as they fall due. If a business were not considered a Fortführungseinheit, its assets would likely be valued at their liquidation value, which is usually significantly lower than their going concern value.

The going concern assumption is made by management when preparing financial statements. Auditors then review management's assessment to determine if there are any significant doubts about the entity's ability to continue as a Fortführungseinheit. Factors that might cast doubt include recurring operating losses, negative net worth, inability to pay debts as they mature, and adverse legal or regulatory environments. If significant doubts exist, disclosures must be made in the financial statements, and in severe cases, the going concern assumption may be deemed inappropriate.