PERSPECTIVE AND ISSUES
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 ...