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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…show more content…
4. How should the other costs (irrevocable contracts) be accounted for under GAAP? Summary Conclusion(s) on Accounting Questions: 1. Operating lease termination (modification): 2. One time employee termination benefits: 3. Relocation costs (including dismantling costs): 4. Other Costs: Authoritative and Interpretive Guidance Considered: Refer to SFAS 146 (June 2002 "Accounting for Costs Associated with Exit or Disposal Activities"); Refer to FASB Concepts Statement No. 6 (Elements of Financial Statements); Refer to ASC 205-20-45 (Reporting Discontinued Operations) Refer to ASC 405-20-05-2 (Extinguishments of Liabilities) Refer to ASC 410-20-15 (Scope and Scope Exceptions - Asset Retirement and Environmental Obligations) Refer to ASC 410-20-20 (Asset Retirement and Environmental Obligations - Glossary) Refer to ASC 410-20-30-1 (Asset Retirement Obligations - Determination of a Reasonable Estimate of Fair Value) Refer to ASC 410-20-55-1→4 (Asset Retirement Obligations - Determination of Whether a Legal Obligation Exists) Refer to ASC 420-10-15-3a→e (Exit or Disposal Cost Obligations - Scope) Refer to ASC 420-10-15-4 (Exit or Disposal Cost Obligations - restructuring) Refer to ASC 420-10-25-1→3 (Exit or Disposal Cost Obligations - Recognition (Overall)) Refer to ASC 420-10-25-4→10 (Exit or Disposal Cost Obligations - Recognition (One-Time Employee Termination Benefits)) Refer to ASC 420-10-25-11→13

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