29ASC 420 EXIT OR DISPOSAL COST OBLIGATIONS

PERSPECTIVE AND ISSUES

Subtopic

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

  • ASC 420-10, Overall, which provides guidance on the definition, reporting, and disclo- sure 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)

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. Also see Appendix A, Definitions of Terms, for: Acquiree, Acquirer, Acquisition by a Not-for-Profit Entity, Business, Business Combination, Legal Entity, Not-for- Profit Entity, and Variable Interest Entity.

Cease-Use Date. The date the entity ceases using the right conveyed by the contract, for example, the right to use a leased property or to receive future goods or services.

Communication Date. The date the plan of termination for one-time employee termination benefits meets all of the criteria in paragraph 420-10-25-4 and has been communicated to employees.

Legal Notification Period. The ...

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