Wiley Practitioner's Guide to GAAP 2022

28ASC 420 EXIT OR DISPOSAL COST OBLIGATIONS

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

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, but is not limited ...