Coronavirus-related impairment of nonfinancial assets

Now updated with FAQs, the Hot Topic addresses a company’s need to evaluate the recoverability of goodwill, intangible assets, property, plant and equipment, and lease right-of-use (ROU) assets. 

Applicability

• All companies 

Relevant dates

• Effective immediately  

Key impacts

The COVID-19 outbreak is having a significant impact on global markets and its effects may trigger the need for companies to evaluate the recoverability of nonfinancial assets.

General questions that companies may be asking include:

• Has our supply chain been disrupted so that we cannot procure raw materials or components for finished goods?
• Has volatility in commodity prices negatively impacted revenues or production costs?
• Have workforce limitations impeded our ability to manufacture products or service our customers?
• What concessions have we provided to our customers?
• Have we lost business due to event cancellations, store or facility closures, lower consumer sentiment, etc.?
• Are operations being curtailed temporarily, or assets mothballed?
• Have the circumstances significantly changed how we expect to use our long-lived assets?
• Are our customers struggling to pay their obligations or even remain in business?
• Has our stock price significantly decreased? 
• Have we revised our earnings guidance downwards?

Report contents

• Background
• Goodwill
• Other assets
• Disclosures
• Subsequent events