Restucturng

1668 words 7 pages
Pharma Co

Date: June 18, 2016

Prepared by: John B. Owens

Viewed by: Joseph Walsh

Issue: Determine proper accounting treatment for restructuring program costs under GAAP for the year ended December 31, 201X.

Background: Pharma is in the process of restructuring a business line. As part of a restructuring, the Pharma 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 include terminating certain employees (research and development employees). On December 15, 201X, Pharma issued a press release announcing its intentions to terminate the lease of the old facility. On December 27, 201X, Pharma management communicated
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-14→15 (Exit or Disposal Cost Obligations - Recognition (Other Associated Costs))
Refer to ASC 420-10-30-1→3 (Exit or Disposal Cost Obligations - Initial Measurement - Fair Value)
Refer to ASC 420-10-30-4→6 (Exit or Disposal Cost Obligations - Initial Measurement - One-Time Employee Termination Benefits)
Refer to ASC 420-10-30-7→9 (Exit or Disposal Cost Obligations - Initial Measurement - Contract Termination Costs)
Refer to ASC 420-10-30-10 (Exit or Disposal Cost Obligations - Initial Measurement - Other Associated Costs)
Refer to ASC 420-10-45-2 (Exit or Disposal Cost Obligations - Exit or Disposal Activity Involving a Discontinued Operation)
Refer to ASC 420-10-50-1 (Exit or Disposal Cost Obligations - Disclosure)
Refer to ASC 420-10-55-11 (Exit or Disposal Cost Obligations - Example 4: Costs to Terminate an Operating Lease)
Refer to ASC 420-10-S99 (Exit or Disposal Cost Obligations - SEC Guidance)
Refer to ASC 712-10 (Compensation — Nonretirement Postemployment Benefits)
Refer to ASC 840-20-50 (Operating Leases - Disclosure)
Refer to ASC 840-20-55-5 (Operating Leases - Determining Whether a Lease Modification Involves a Termination Penalty)
Refer to ASC 842-20-40-1 (Lease Termination)

Detailed Discussion, Analysis, Evaluation of Alternatives & Reasons for Conclusion(s):

Overview: Restructuring charges are reported as a component of income from continuing operations and are generally associated with strategies which decrease income, at least

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