Accounting for Pharma Co.’S Restructuring Program of Relocating a Manufacturing Operation Including Terminating Certain Employees Under Ifrss and Gaap.

2575 words 11 pages
Pharma Co.
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
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6 paragraph 35 (Definition of liability)
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)

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


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