In a newspaper article that appeared in the Canberra Times on 4 May 2015 entitled Serco unable to detain the red ink as $395 million loss posted, it was noted:

Although the parent company injected an additional $100 million of equity late last year, Serco Australia reported net assets of only $32 million at year end. Its parent, Serco Group Pty Ltd, reported an even worse result, with a net loss of $490 million on revenues of $1.2 billion. Despite the injection of equity, Serco Group reported negative net assets of $43 million at the end of 2014. This means the Serco Group in Australia is technically insolvent as its liabilities exceed its assets by $43 million. Notwithstanding this result and the distress of negative net assets, Deloitte has not qualified the accounts or challenged management's assertion that the company's accounts are appropriately prepared on a going-concern basis.

Required:

i. Pursuant to the conceptual framework, are general purpose financial statements prepared on the assumption that the reporting entity is a going concern? Does this assumption appear reasonable given the evidence provided above? Give reasons

ii. If an entity is not considered to be a going concern, what implications does this have for how the financial statements should be prepared? Give reasons