Hot Topic | April 2020

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. 

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

Related content

Financial reporting impacts of coronavirus

 

Spotlight on contributors

Nick Burgmeier

Nick Burgmeier

Partner, Dept. of Professional Practice, KPMG US

Kevin Manson

Kevin Manson

Senior Manager, Dept. of Professional Practice, KPMG US

Justin Miller

Justin Miller

Managing Director, Dept. of Professional Practice, KPMG US

Julie Santoro

Julie Santoro

Partner, Dept. of Professional Practice, KPMG US

 

 

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