Question
Sky Limited is a travel agent. The competition in the industry is keen, and many entities have failed and closed down in recent years. After
Sky Limited is a travel agent. The competition in the industry is keen, and many entities have failed and closed down in recent years. After having net losses in the past few years, Sky Limited reported net losses of HK$8 million for the year ended 31 August 2021. Its current assets and current liabilities as of 31 August 2021 were HK$16 million and HK$22 million respectively. Sky Limited breached the loan covenants relating to the borrowings from two financial institutions and was considering selling its key assets to repay the loans. Explain what assumption in the Conceptual Framework may not hold when preparing Sky Limiteds financial statements for the current year ended 31 August 2021.
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