Hot Topic | July 2020

 

Insight

Financial reporting implications of the CARES Act

Updated: Tax, loan, grant and other CARES Act provisions may significantly affect companies’ financial reporting.

Scott Muir

Scott Muir

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5073

Valerie Boissou

Valerie Boissou

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-1723

Meredith Canady

Meredith Canady

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5858

Regina Croucher

Regina Croucher

Partner, Dept. of Professional Practice, KPMG US

+1 816-802-5840

Mahesh Narayanasami

Mahesh Narayanasami

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-7355

Mark Northan

Mark Northan

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-6927

Angie Storm

Angie Storm

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5488

Accounting and reporting impacts of the CARES Act

Updated: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. It is the third COVID-19-focused relief bill and by far the largest in terms of scope and cost.

Applicability

  • All companies that report under US GAAP

Relevant dates

  • CARES Act was signed into law on March 27, 2020
  • Effective immediately

Key impacts

The CARES Act includes many provisions that could significantly affect the financial reporting of companies applying US GAAP.

The Act is, in general, a current reporting period event for annual and interim reporting periods ending on or after March 27, 2020, and a nonrecognized subsequent event for annual and interim reporting periods ending before that date.

KPMG addresses the primary accounting and reporting impacts of the CARES Act provisions as we currently understand them.

Report contents

  • Background
  • Applicability
  • Key impacts
  • Income taxes
  • Payroll taxes
  • Government grants and payments for goods and services
  • Debt and equity interests issued
  • Deferral of CECL and suspension of TDR guidance
  • Mortgage relief
  • Lease eviction moratorium
  • Subsequent events and going concern

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