29 April 2020
The Accounting Standards Board of Canada (AcSB) has published a series of short articles on accounting considerations in the context of the COVID-19 pandemic.
So far, the following articles are available (all links to the AcSB website):
- Going Concern and Liquidity Risk. Most companies, unless they are an essential service, are likely in a situation where they’ve had a significant drop in their operations or are closed, which may call into question their long-term viability or ability to continue as a going concern.
- Potential Impact on Lease Accounting. The COVID-19 pandemic is affecting the ability of organisations to collect and pay rent and other lease obligations. This means companies should use professional judgement and consider the potential implications that COVID-19 could have relating to the accounting for leases under IFRS 16 Leases.
- Events After the Reporting Period. Most companies, unless they are an essential service, are likely experiencing a material decline in their operations or are closed. This raises questions about whether they need to adjust their year-end or interim financial statements or provide additional disclosures for events after the reporting period.
- Income Taxes. The COVID-19 pandemic is affecting the recoverability of deferred tax assets and has introduced new government relief measures. Entities should use professional judgment to assess how this will impact the accounting for income taxes in accordance with IFRS Standards.
- Impairment of Non-financial Assets. COVID-19 is having a significant economic effect on companies, many of which are now facing declines in production, sales, and demand for their goods or services. These declines affect a company’s profitability and may give rise to events that indicate that its non-financial assets, such as intangible assets, goodwill, property, plant, and equipment may not be recoverable.
- Potential Impact on IFRS 13 Fair Value Measurement. The COVID-19 pandemic continues to evolve rapidly and market-based measures like fair value are likely to change significantly and perhaps in unpredictable ways as a result.
- Discount Rates. The risks and uncertainties arising from COVID-19 and the move by central banks to cut their overnight rates may affect discount rates used in asset and liability measurements.
Please note that these articles are also available in the French language and can be accessed here.