Impairment Losses of Finances in Company

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Loss of finances in large companies is expected because the support of a vast enterprise is complex and requires constant monitoring. Kraft Heinz Co. wrote off about $ 3 billion, which is due to losses due to the coronavirus (Tascarella). The method of determining the number of casualties was calculating the number of shares for a certain period, the number of customers who suffered from the coronavirus, and the amounts of their purchases from Kraft of various goods. As for General Electric, in their case, about $23 billion was lost due to the write-off of goodwill of its energy division (Feirstein). The calculation method consisted of determining the costs of paying for a specific company division.

In the cases of both companies, tangible investments were used to classify investments since the contribution occurred in various real objects. Depending on whether these investments will be classified as current or long-term, they will naturally be different. The fair value of these investments was less than their cost price because the sale was made when the companies were experiencing significant difficulties and unexpected large financial losses. The accounting policy for the accounting purposes of both enterprises may differ depending on the specific area of calculations. Companies can make calculations about the availability of services and products and calculate income from ordinary activities and other methods. This is due to precisely what goals the company pursues in the field of its accounting calculations.

The accumulated other comprehensive income on securities of both companies is not indicated. Operating income is revenue from the sale of other assets and income related to other activities. Total income is the profit received in each month; that is, the difference is that real income is profit from all types of activities, and operating income is profit only from the sale of assets. The amount of Kraft’s loss was $ 3 billion, and General Electric’s losses were about $ 29 billion. The company’s income is not reported, but in the balance sheet, these numbers would be indicated as income and lost profits.