Final answer:
A company's IFRS statement of financial position assumes assets are reported at historical or depreciated cost, aligning with the 'going concern' principle, not at their net realizable value. Net worth is the balance between total assets and total liabilities, and assets must always equal liabilities plus net worth for the T-account to balance.
Step-by-step explanation:
The assumption inherent in a company's IFRS statement of financial position is not that companies recover and settle the assets and liabilities at their net realizable value. Instead, IFRS assumes that a company will continue operating in the foreseeable future, which is the 'going concern' principle. Accordingly, the assets are reported at their historical cost or depreciated cost, not net realizable value, unless the asset is held for sale, in which case its value might be adjusted to the lower of its carrying amount or fair value less costs to sell.
It's important to understand the different components of a company's balance sheet. Assets include items like financial instruments held by a bank, including reserves, loans made, and securities purchased. Liabilities represent what the bank owes, such as customer deposits. The difference between the total assets and total liabilities represents the net worth or equity of the bank. This net worth must be positive for a healthy business and will be negative for a bankrupt firm. To ensure that the T-account balances, assets must always equal liabilities plus net worth.