Muhammad Adil

Highlighting the impacts of COVID-19 on Australian listed companies in the area of AASB-136 (Impairment of Assets) Companies Name Date: 9/15/2020 Author: Company: Academies Australasia Industry: Education & Training Services Company Name: Qantas Airways Industry: Air Transportation Services TABLE OF CONTENT Introduction PAGE 3 Highlighting the impact of Covid 19 on Companies Financial Statement and their Strategies PAGE 4 AND 5 References PAGE 6 2 Introduction Before December 2019 the world was going on a very splendid pace. Parents used to go offices, school were opened for children and businesses were welcoming potential investors but guess what happened? The outbreak of Coronavirus, also known as Covid 19, in December 2019 in Wuhan City, China. This pandemic not only put human lives in danger but also it leaves acrimonious affect on business community and companies. Australian Accounting Standards Board (AASB) It requires the companies to make their financial statement as per relevant accounting standards. One of the main standard is AASB- 136 “Impairment of Assets” which states that :  An entity’s assets must not carried at more than their recoverable amount3 (i.e. the higher of fair value less cost to sell or value in use)  the asset is described as impaired when its recoverable amount is less than its carrying amount2 and Standard requires the entity to recognize an impairment loss1 for the year in its financial statements  It requires to conduct impairment tests where there is an indication of impairment of an asset, and the test may be conducted for a 'cash-generating unit' where an asset does not generate cash inflows that are largely independent of those from other assets. Required to cond uct impairment tests where there is an ind ication of impairment of an asset, and the test may be conducted for a 'cash-generating unit' where an asset does not generate cash inflows that are largely independent of those from other assets. 3 Highlighting the impact of Covid 19 on Companies Financial Statement and their Strategies Company A: Academies Australasia Group Limited In its financial statement of year ended 2019 company, reported $382,000 accumulated impairment loss. Despite of covid-19 pandemic, education sector was expected to increase its shares in market because of sudden boom in online education system and it does.  For the year ended 2020 company didn’t report any impairment loss.  Increase in Online education trend, for the year ended 2020 Company reported Profit before tax $- which is increase by $83000 from year 2019  Company reports $- administration expenses which is less than the previous year of $- Conclusion Covid 19 outbreak didn’t bring much problems for education sector. Instead it became an opportunity for real investor to invest in this sector and earn beneficial returns. 4 Company B: Qantas Airways Limited Air industry is the one which is highly affected by Pandemic of Covid 19. All of the countries around the globe put restrictions on traveling and Air flights of companies. Qantas Airways is one of them. Qantas Airways Limited is the flag carrier of Australia and its largest airline by fleet size, international flights and international destinations. It is the third oldest airline in the world, Following are Challenges and difficulties it is facing since December 2019 and its impact on its financial statements  Highly strict restrictions imposed by government of Australia stating not to continue its operations till the decline of covid-19  Resulting decline of $- decline in its revenue for first quarter 2020 so far (2019: $- – 2020.1Q : $- ). Reason of Decline is not receiving revenue plus Impairment loss for the year because of no running of Assets. Recoverable amount is lower than carrying amount resulting impairment loss.  Reported Increase debt of $24000 for first quarter ended 2020 (2019: $- – 2020.1Q: $-) Steps taken to overcome these Challenging time by company  Mitigated its fall in Group total revenue through 75% reduction in its net operating expenses  By introducing “Fly Well Program” conducted rescue flights and kept vital transport and freight links open in this disastrous time to lessen the effects of Pandemic in company’s financial performance Conclusion Although coronavirus impacts on Qantas airways limited very harshly in financial terms but the company’s management putting their all efforts to Maintain the goodwill, customer loyalty and market share in its Air Industry. Company raised $1.43b equity to fund the three–year recovery plan and to Accelerate recovery from the COVID-19 crisis. 5 References 1. Impairment loss: the amount by which the carrying amount of an asset or cash-generating unit exceeds its recoverable amount 2. Carrying amount: the amount at which an asset is recognized in the balance sheet after deducting accumulated depreciation and accumulated impairment losses 3. Recoverable amount: the higher of an asset's fair value less costs of disposal* (sometimes called net selling price) and its value in use 4. Australian Securities and Investment Commission (ASIC) https://asic.gov.au/regulatory-resources/financial-reporting-and-audit/covid19-implications-for-financial-reporting-and-audit-frequently-asked-questionsfaqs/#q1 5. Annual Report of Qantas Airways Limited file:///C:/Users/muhadil/AppData/Local/Temp/-.pdf 6. Annual Report of Academies Australasia https://academies.worldsecuresystems.com/Annual%20Reports/2020AnnualR eport.pdf 6