How the treatments and disclosures about impairment

Assignment Help Accounting Basics

Reference no: EM132688960

In order to provide an enhanced report of Blackmores Ltd- Will have to check if the impact of Covid-19 has caused impairment of assets. The company's financial performance including estimation of future cash flows and earnings might have been greatly disturbed by the impact of Covid-19 related on-going events. Disclosures must specify the materialistic problems on assets, liabilities, solvency, and liquidity as well as any type of big uncertainties, risks and future prospects.

Financial Asset Accounting- There has been a reduction in original value of assets and hence the debtors will be unable to adhere with the terms of their contract of borrowings, loans etc. The company will have to set up specific measurements for compliance with impairment loss recognition requirement.
Changes in Contract- Due to the pandemic the economic activities of the entity has been affected and will have to negotiate all terms and regulations of a contract. For example- compensation to their members including the option of work from home, re-negotiation of leases and tenure. IFRS standards must be considered while working this out.
Complete Disclosure- All partners and stakeholders must be made aware of the problems faced and the financial standing of the company. Their circumstance and risk exposure especially financial statement disclosure needs to specify the materialistic consequences of the pandemic.
End of period Reporting- It is difficult for a firm to decide if after the reporting period an event is adjusting or non-adjusting in a worldwide marketplace under the current circumstances. As, there is new information daily that makes the market quite volatile. Hence, the entity must carefully make decisions as per the latest news from the government.
Thus, Blackmores will have to try their best to come up with worthy estimations, make reliable and comprehensive documentation to support each decision of estimation. While keeping in mind the sensitivity of change due to the unforeseeable circumstances

Problem 1: Discuss how the treatments and disclosures about impairment suggested by you for the year ended 30 June 2020 meet the fundamental characteristics of financial reporting as per the Conceptual Framework?

Reference no: EM132688960

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