Financial Reporting Alert 21-2 — Financial reporting considerations related to inflation, supply chain disruptions, and labor shortages
This Financial Reporting Alert takes a strategic look at financial reporting and accounting challenges related to inflation, supply chain disruptions, and labor shortages that companies may face both individually and collectively as the economy emerges from the COVID-19 pandemic. Considerations discussed include (1) effects on forecasts used in accounting estimates, (2) the potential accounting and financial reporting consequences of holding various investments as hedges against inflation, (3) the appropriateness of the discount rate used to measure any pension-related liabilities, (4) the potential accounting implications of including increased costs in inventory, and (5) communication with stakeholders.