Explain the financial impact south africa credit rating

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On 27 March 2020 Moody's Investors Service (Moody's) issued a statement in which the ratings agency downgraded South Africa's sovereign credit rating to junk. Moody's explained that the rationale for the rating downgrade include, but is not limited to, South Africa's excessive debt burden and the country's unreliable electricity supply. On that same day you read an interesting article highlighting that as a result of the most recent coronavirus (COVID-19) outbreak and the national lockdown to prevent the spread of COVID19, many South African economists predict that a large number of small businesses would be forced to close down.

REQUIRED:

Question (a) Give the accounting assumption which will apply if small businesses close down, and briefly explain your answer.

Question (b) Briefly explain the financial impact South Africa's credit rating downgrade will have on its imports.

Reference no: EM132576722

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