Question

Many companies have experienced significant declines in operational activities and/or additional operational costs because of the...

Many companies have experienced significant declines in operational activities and/or additional operational costs because of the COVID-19 pandemic. Some of the declines may be temporary while others reflect longer lasting or even permanent shift in the business or industries in which these companies operate. Management should assess the existing and anticipated effects of COVID-19 on the company's activities. In this post, describe what challenges management faces associated with the valuation of definite- and indefinite-lived assets for financial reporting under U.S. GAAP.

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Answer #1

Coronavirus disease 2019 (COVID-19) has given a major economic crisis along with health effects.

  • First, how can small businesses accommodate the economic disruptions arising from COVID-19?
  • Second, how long did businesses expect the crisis to last, and how did expectations affect their decisions?
  • Third, how can alternative policy proposals affect trade and employment flexibility?

More than 5,800 small businesses were surveyed, a network of 4.6 million small businesses. The survey was conducted between March 28 and April 4, 2020. At the time of the survey, we tried to understand the expectations of business owners at a critical point when both the progress of COVID-19 and the government's response were quite uncertain.

Results showed that the epidemic had already caused widespread disarray among small businesses, beyond the full sample, 43% of businesses were temporarily closed, and nearly all of these closures were due to COVID-19. Respondents had temporarily laid off what indicated a reduction in demand and employee health concerns as reasons for the closure.

Approximately, businesses have reduced their active employment by 39% since January. Where 54% of firms closed down and employment decreased by 47%. Impacts in all industries, including retail, arts and entertainment, personal services, food services, and hospitality businesses, declined by more than 50% reporting reports. This survey eliminated businesses' beliefs about the development of the crisis, allowing us to study the role of beliefs and expectations in decisions. The medieval business owner expected the clutter to remain well midsummer, as 50% of respondents believed the crisis would last until at least mid-June. However, assumptions about the likely duration of the crisis vary widely.

The survey was designed to evaluate a direct credit policy, a stylized representation of traditional Small Business Administration disaster management programs. While more lenient PPP program take-up and improved business outcomes, traditional loans with faster delivery and adequate liquidity also transfer business owners' expectations about survival. When loans are directly compared without the provisions for amnesty, marginally higher in the CARES Act.

This contributed to our understanding of the economic impact of COVID-19 on the small business ecosystem, the fate of 48% of US workers working in small businesses linked to the resilience of the small business ecosystem with the massive economic disruption caused by the epidemic is. The policy was conducted during a period of uncertainty and before any federal response was enacted.

Its results highlight the role that length of crisis will play in determining its ultimate impact, which policymakers must consider as they consider the scale of interventions required.

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