Accounting in the Corona Crisis
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Accounting in the Corona Crisis

The far-reaching effects of the Corona pandemic on companies are ultimately also reflected in the accounting and reporting for the financial year 2020. Here you can find out how your accounting will be affected by the corona crisis.

In an earlier blog post, we had already explained that the corona pandemic is a value-driving event of the financial year 2020. Consequently, there were no direct effects on the accounting in the financial statements of 2019, if the existence of the company preparing the financial statements was not threatened. The future development under Corona was only to be discussed in the supplementary report in the notes and in the management report.

With a view to the end of 2020, however, now the question arises as to how the corona crisis will affect your balance sheet 2020. We look at the annual financial statements and management report.

Corona crisis and the principle of consistency in accounting

The principle of consistency requires you to maintain or continue the recognition and measurement methods applied to the previous annual financial statements, including the exercise of discretionary powers. You may only deviate from this principle in justified exceptional cases in order to ensure the comparability of the annual financial statements.

As the corona pandemic has a significant impact on the majority of companies, it can be assumed that the accounting and valuation methods chosen so far will have to be reviewed.

Evaluation of selected assets in the Corona crisis

On the assets side of the balance sheet, you should check whether the assets shown in the balance sheet are subject to extraordinary depreciation. This is because the fair values could have fallen below the book values. Here you must differentiate between fixed and current assets.

Fixed assets

In general, you have to make unscheduled depreciation in fixed assets if there is an expected permanent reduction in value. This must be checked for each individual asset.


In the case of goodwill, you can expect impairment losses. After all, if there is a significant change with negative consequences for the company in the technical, market-related, economic, legal or statutory environment, the value of goodwill will decrease.

Property, plant and equipment

Impairment losses must be recognized for property, plant and equipment in the event of temporary closure or limited usefulness, if the restrictions are likely to be permanent. In addition, assets that must be permanently shut down must be written down to their net realizable value at the time of decommissioning.

Financial assets and investments or shares in affiliated companies

In the case of financial assets, there is a distinction between exchange traded securities and corporate investments.

You have to depreciate exchange-traded securities if the book value falls significantly below the current prices. Here, certain periods of time and the relative amount of the shortfall are important.

Participations or shares in affiliated companies must be written off if the book values shown in the balance sheet are no longer covered by the company value (defined as future profit value) of the company.


In the inventory, you have to check whether you can still sell the goods to customers. On the other hand, the question arises as to whether so-called „idle costs“ will be incurred if production is limited. A temporary decommissioning or restricted use of production can lead to significant underutilization of capacity. However, the general costs attributable to this period may not be included in the production costs, as you may only take into account reasonable portions of these costs. The general costs of decommissioning or restriction of use are not caused by production and may therefore not be written off as so-called „idle costs“. These are to be recognized as expenses in the period in which they are incurred.

Receivables from debtors

If it is foreseeable that debtors will run into payment difficulties or if payment difficulties already exist, they must write down the corresponding receivables to fair value by making an individual value adjustment. In addition, you should check whether the amount of lump-sum valuation adjustments should be increased.

Valuation of selected liability items in the Corona crisis


The corona pandemic has a negative impact on a variety of business models. Previously profitable businesses have lost profitability. As a result, long-term contracts requiring the purchase of goods at predefined conditions may now result in losses.

Provisions for impending losses must be formed for this purpose. However, they should also check whether the contracts contain so-called force majeure-clauses, which subsume the corona pandemic as higher force. This would allow you to terminate such contracts before the end of the year and eliminate the need to form a provision for impending losses.


The pandemic is not expected to have any impact on the amount of liabilities to be settled. However, negative consequences may arise if covenants have been agreed which can no longer be met due to the pandemic. Loans could then be called in or cancelled. This could have a negative impact on the forecast for the Group’s ability to continue as a going concern.

Effects of the Corona crisis on reporting in the notes and management report of the financial statements 2020

During the corona crisis, the notes to the financial statements may require in particular information, which are necessary for the assessment of the financial position if the liquidity situation has developed negatively. In addition, they must also explain the extent to which it is necessary to deviate from previous accounting principles because of the pandemic.

While in fiscal year 2019 the consequences of the pandemic were mainly reflected in the Management Report in the Opportunities, Forecasts and Risk Report, reporting in 2020 will be much more extensive. The effects on the net assets, financial position and results of operations as well as industry-related and macroeconomic changes must be taken into account over time.

Our assessment

For the majority of companies, the pandemic is expected to have an impact on their annual financial statements and management report. In order to avoid problems and delays in preparation, we recommend that you deal with this issue at an early stage.

If you have any questions, we are at your disposal.

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