Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

28   ASC 420 EXIT OR DISPOSAL COST OBLIGATIONS

Perspective and Issues

Subtopic

Scope and Scope Exceptions

Overview

Definitions of Terms

Concepts, Rules, and Examples

Employee Termination Benefits

Measurement

Timing

Examples of the determination of the minimum retention period and recognition

Subsequent measurement

Plan includes voluntary and involuntary benefits

Contract Termination Costs

Other Associated Costs to Exit an Activity

Reporting and Disclosure

PERSPECTIVE AND ISSUES

Subtopics

ASC 420, Exit or Disposal Cost Activities, consists of one subtopic:

ASC 420-10, Overall, which provides guidance on the definition, reporting and disclosure of such costs.

Scope and Scope Exceptions

ASC 420 applies to all entities. It does not apply to:

• Costs associated with the retirement of a long-lived asset covered by ASC 410-20
• Impairment of an unrecognized asset while it is being used.

  (ASC 420-10-15-5)

Overview

ASC 420-10-15-4 clarifies that an exit activity includes, but is not limited to:

• A restructuring
• The sale or termination of a line of business
• The closure of business activities in a particular location
• The relocation of business activities
• Changes in management structure
• A fundamental reorganization that affects the nature and focus of operation.

DEFINITIONS OF TERMS

Source: ASC 420-10-20

Acquiree

The business or businesses that the acquirer obtains control of in a business combination. This term also includes a nonprofit activity or business that a not-for-profit acquirer ...