EADS Ltd. is involved in a restructuring related to its energy division. The company controller and CFO
Question:
1. The company has a long-term lease on one of the facilities related to the division. It is estimated that it will have to pay a penalty cost of ¥400,000 to break the lease. The company estimates that the present value related to payments on the lease contract is ¥650,000.
2. The company's allocation of overhead costs to other divisions will increase by ¥1,500,000 as a result of restructuring these facilities.
3. Due to the restructuring, some employees will be shifted to some of the other divisions. The cost of retraining these individuals is estimated to be ¥2,000,000.
4. The company has hired an outplacement firm to help it in dealing with the number of terminations related to the restructuring. It is estimated the cost for this outplacement firm will be ¥600,000.
5. It is estimated that employee termination costs will be ¥3,000,000.
6. The company believes that it will cost ¥320,000 to move useable assets from the energy division to other divisions in the company.
Instructions
Indicate whether each of these costs should be included in the restructuring provision in the financial statements.
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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