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Where and how should COVID-19 impacts be presented in the income statement and related notes?
- 05 August 2020
- Accounting
- South African Accounting Academy
The COVID-19 coronavirus pandemic is affecting the financial performance of many companies. Companies may intend to highlight and explain these impacts – i.e. by including quantitative and qualitative information about them either inside or outside the financial statements.
This KPMG article explores primarily how companies might present these impacts on financial performance in the income statement. Specific matters are highlighted that, in their view, should be considered by companies when determining how to present and disclose them in their income statement and related notes.
The article analyses IAS 1 Presentation of Financial Statements, and states that a company should consider as COVID-19-related only the income and expenses that are incremental and directly attributable to COVID-19. These are income and expenses that would not have been earned or incurred if the COVID-19 pandemic had not occurred and are not expected to recur once the effects have largely receded.
Certain types of income and expenses can be more easily determinable as relating to COVID-19. For example:
- additional cleaning and sanitation costs incurred as part of infection control or prevention;
- temporary hazard pay to employees;
- penalties for delays or non-performance of contracts due to closure of production facilities; and
- rent concessions from lessors that occur as a direct consequence of COVID-19.
Access the rest of the article here.