COVID-19 increases risk of impairment of goodwill and long-lived 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.
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?
- Other assets
- Subsequent events
Financial reporting impacts of coronavirus
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