Covid-19 has substantially affected all areas of business. Corporate reporting is no exception to current scenario and financial reports of companies will paint quite a different picture as compared to past. Various accounting standards which in normal circumstances are not applied so rigorously will gain tremendous importance now. Two such standards are IAS 36 Impairment of assets and IAS 37 Provisions contingent assets and contingent liabilities.
The way the companies apply these standards on their financial statements will have material impact on the financial performance and financial position of the company.
Keeping in view current economic scenario and the way Covid-19 has affected economic activities, write a report on application of the above two standards. Your report should specifically cover discussion on;
- Introduction covering theoretical underpinning of IAS 36 and IAS 37.
- Recognition and measurement criteria of IAS 36 and IAS 37.
- Relevance of IAS 36 in current economic scenario. Give specific examples of indicators arisen due to Covid-19 which may suggest assets are impaired and explain the impact of this impairment on financial statements.
- Relevance of IAS 37 in current economic scenario. Give specific examples of provisions created by companies.
An appropriate conclusion.
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