In an article that appeared in The Age on 17 March 2011 (‘Billabong downgrades profit forecast after quake’ by Jared Lynch), it was stated that:

Shares in surfwear retailer Billabong fell yesterday after the company predicted the Japanese earthquake and tsunami would dent its full-year profit.

Company secretary Maria Manning said Billabong’s Japanese warehouses and offices sustained no damage, but almost half the company’s Japanese stores and the wider wholesale account base ‘have been or are likely to be affected’.

REQUIRED

How would lost profits resulting from such a disruption be treated for financial accounting purposes? That is, how are such ‘opportunity costs’ recognized?