Adviser alert – COVID-19: accounting considerations for CFOs

The Grant Thornton International IFRS team has published COVID-19 accounting considerations for CFOs: Impairment of intangible assets and goodwill.

The business and operations of many entities have already been seriously affected by the rapid global spread of COVID-19 and related government actions. Unfortunately, many businesses will continue to be affected for some time. This has consequences for their value and the value of many of their commercial assets.

In this volatile environment, any impairment of goodwill and other long-lived assets has the potential to materially reduce reported earnings.

While impairment losses provide only a lagging indicator of negative developments, this does not reduce the importance of ensuring that the reported values for goodwill and other intangibles reflect an appropriate value. This includes any impairment in value reflecting the economic impact of COVID 19.

This publication contains some issues for management to consider in assessing impairment together with some direction as to how best to respond to them.