There is a company whose adudit iam involved in.This company has disconitnued its main objective of manufacturing wires since 2005.Presently its income is from interest and rental income only.It doesnt provide for deprn. on its plant and mahinery as it is not put to use during the year.It has also surrendered the electricity line of its main factory this year.I have two questions to ask
1. The operation of borrowing and lending money and thereby earning interest is not stated in its objective clause as per MOA.So is it not ultravires and if it is so what is the liability? Also what kind of reorting should the auditor do?
2. Whether the going concern assumption is valid in such circumstance?
CAclubindia
