The COVID-19 relief published in the Staff Q&A has no specific end date. There are also a number of disclosure requirements, including in scenarios when there is significant continuing involvement by the seller in the discontinued operation, such as through a transition services agreement or similar arrangement. Financial statement disclosures for restructuring activities are outlined in, Companies contemplating restructuring activities should also consider the requirements of, In addition to restructuring activities and discussing the overall results of operations, it is also important for companies to highlight known trends or uncertainties within MD&A. Link copied Overview. It is for your own use only - do not redistribute. You can set the default content filters for your homepage. All rights reserved. If only the held-for-sale criteria are met (i.e., the disposal does not meet the strategic shift and/or major effect criteria), adjustment to prior-period balance sheet presentation is not required. In addition to these “one-off” initiatives, the recurring “blocking and tackling” of the year-end financial reporting process remains, which for many organizations will be performed remotely for the first time. In this environment, many companies are looking to increase liquidity, including through restructuring programs, lease renegotiations, or strategic disposals of assets or businesses, and in some cases are considering the abandonment or sublease of unused real estate. Costs Associated With an Exit or Disposal Activity Within a Single Income Statement Line Item — 420-10-45 (Q&A 04) Previous Section Next Section . SFAS 146, June 2002. PwC's Accounting podcast series includes a library of podcasts covering the most significant accounting and reporting trends relevant for the year-end close. It should be noted that this guidance applies only to operating leases, not to capital leases. What are the components of the accounting equation? If this problem persists please contact support. An acquirer should recognize a liability for a customer contract assumed in a business combination if it represents a performance obligation, as defined in, Assets and liabilities arising from revenue contracts acquired in a business combination should be recognized and measured by the acquirer in accordance with. We discuss accounting considerations for each of these in this edition. By continuing to browse this site, you consent to the use of cookies. For more information on the amendments, read our In the loop. Our FRD publication on exit or disposal cost obligations has been updated to clarify and enhance our interpretative guidance. Filters are optional. A liability for a cost associated with an exit or disposal activity is measured initially at its 4. Accounting Journal Entries & Financial Ratios. An activation email has been sent to your registered email to allow you to login.An activation email has been sent to your registered email to allow you to login. Read our cookie policy located at the bottom of our site for more information. Exit or disposal cost obligations. Costs to close facilities and relocate employees 3. For leased space, the ROU asset is generally not abandoned until the date the space is fully vacated and the lessee has no intention to further benefit from the leased asset. 1. Costs associated with an exit or disposal activity that are covered by ASC 420 include, but are not limited to, one- time involuntary termination benefits and certain contract termination costs. This content is copyright protected. These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. In practice, the most common tax rate will be 19%. In case of moving the tax residency abroad, exit … The structure of these programs varies and companies should consider whether the impact of actions taken with vendors or other third parties (e.g., financial institutions) to extend payment terms or otherwise alter cash flows associated with vendor payables should be disclosed, in addition to evaluating any statement of cash flows impacts. In practice, the most common tax rate will be 19%. Costs Associated with Exit or Disposal Activities. With many continuing to operate remotely during the year-end close process, companies may need to place more emphasis on organization-wide communication, including outside of the accounting and finance functions, to identify restructuring plans or activities that could result in the recognition of expenses and related liabilities as of year end. 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