Wiley GAAP 2021, 2nd Edition

28ASC 420 EXIT OR DISPOSAL COST OBLIGATIONS

1. Perspective and Issues
   1. Subtopic
   2. Scope and Scope Exceptions
2. Definitions of Terms
3. Concepts, Rules, and Examples
   1. General
      1. When to Recognize a Liability
      2. Subsequent Measurement
   2. Employee Termination Benefits
      1. Timing
      2. Measurement
      3. Examples of the Determination of the Minimum Retention Period and Recognition
      4. Subsequent Measurement
      5. Plan Includes Voluntary and Involuntary Benefits
   3. Contract Termination Costs
      1. Recognition
      2. Measurement
   4. Other Associated Costs to Exit an Activity
      1. Recognition
      2. Measurement
   5. Presentation and Disclosure

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 disclosure of such costs.

Scope and Scope Exceptions

The guidance in ASC 420 applies to:

• Termination benefits for current employees involuntarily terminated under the terms of a benefit arrangement that is not an ongoing benefit arrangement or individual deferred compensation contract
• Costs related to:
  • A contract that is not a lease
  • Consolidation of facilities or relocation of employees
  • A disposal activity under ASC 205‐20
  • An exit activity

• (ASC 420‐10‐15‐3)

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, ...