Accounting for Pharma Co.’S Restructuring Program of Relocating a Manufacturing Operation Including Terminating Certain Employees Under Ifrss and Gaap.
Date: October 8, 2012
Prepared by: Lily Xu
Reviewed by: Professor Dennis Goodman
ISSUE: Accounting for Pharma Co.’s restructuring program of relocating a manufacturing operation including terminating certain employees under IFRSs and GAAP.
Pharma Co. is a U.S. subsidiary of a U.K. entity that prepares its financial statements in accordance with (1) U. S GAAP for reporting to its U. S.-based lender and (2) IFRSs in reporting to its parent. Pharma. Co is in the process of restructuring a business line. As part of the restructuring, Pharma Co. is considering the relocation of a manufacturing operation from its present location to a new facility in a different geographic area. The relocation plan would …show more content…
Refer to ASC 420-10-25-14; ASC 420-10-25-15 (Recognition of other costs associated with restructuring activity)
Refer to ASC 420-10-50-1(Required financial statement disclosure)
DETAILED DISCUSSION, ANALYSIS& REASONS FOR CONCLUSION
1. Pharma Co.’s relocation plan meets the definition of restructuring for the year ended December 31, 2010 under IFRSs.
Paragraph 10 of IAS 37 defines restructuring as a program that is planned and controlled by management, and materially