Need to know April 2020 (Accounting considerations related to the Coronavirus 2019 Disease)
Updated on 11 November 2020
As the pandemic increases in both magnitude and duration, entities are
experiencing conditions often associated with a general economic downturn. This
includes, but is not limited to, financial market volatility and erosion, deteriorating
credit, liquidity concerns, further increases in government intervention, increasing
unemployment, broad declines in consumer discretionary spending, increasing inventory
levels, reductions in production because of decreased demand, layoffs and furloughs, and
other restructuring activities. The continuation of these circumstances could result in
an even broader economic downturn which could have a prolonged negative impact on an
entity’s financial results. This Need to know discusses certain key IFRS
accounting considerations related to conditions that may result from the COVID-19
pandemic.
Key changes include clarifications on disclosures for 'Going
concern' and 'Liquidity risk management', new subsections on 'Dividends
and capital management' and 'Contracts to buy/sell commodities', added
guidance for idle assets in 'Acquisitions and disposals', as well as clarifications
in 'Share-based payments', 'Government assistance' and 'Breach of
covenants'.