memo Essay

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To: Pharma Co. From: Chao Sun Re: Restructuring Costs Date: Sep 28, 2014 Background 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 considering the relocation of a manufacturing operation from its present location to a new facility in a different geographic area as part of the restructuring a business line. The relocation plan related to the following facts: Facts Financial affection Dec 15, 2010, issued a press release to terminate the lease of the old facility. Jan 31,2011,at which time it will sign the lease termination agreement, Pharma Co. plans to vacate the…show more content…
issued a press release to terminate the lease at Dec 15, 2010, this fact did not reach an agreement. So Pharma Co. do not need record the $1.3 termination fee until Jan 31,2011, which was the date sign the termination agreement. One-time employee termination benefits Under ASC 420-10-25-4 requirement, an arrangement for one-time employee termination benefits should meet all the following requirements: “a. Management, having the authority to approve the action, commits to a plan of termination. b. The plan identifies the number of employees to be terminated, their job classifications or functions and their location, and the expected completion date. c. The plan establishes the terms of the benefit arrangement, including the benefits that employees will receive upon termination (including but not limited to cash payments). In sufficient detail to enable employee to determine the type and amount of benefits they will receive if they are involuntarily terminated. d. Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.” Pharma Co. already

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