The accounting standard devoted to liquidation accounts redefines both measurement criteria and disclosure. There are practical consequences for companies being wound up and for liquidators.
Accounting standard OIC 5 governs the preparation of accounts during the liquidation phase, when the going concern perspective gives way to one of realisation and extinguishment of the company’s relationships. The update affects how assets and liabilities are measured and what disclosure must accompany the liquidation documents.
Once liquidation opens, the measurement logic changes: assets are stated at their estimated realisable value and a provision for liquidation costs and charges must be recognised, estimating the net burden expected up to the closing of the procedure.
The opening liquidation accounts, the annual interim accounts and the final accounts mark out the procedure; the liquidators’ report must account for the criteria adopted and for how realisation is progressing. Presenting clear and consistent figures reduces the risk of challenges from shareholders and creditors.