Question
ABC Ltd is a large company that consists of many divisions. The toy division was not operating effectively so management has decided to restructure the
ABC Ltd is a large company that consists of many divisions. The toy division was not operating effectively so management has decided to restructure the Toy division. It will combine the toy division with the clothes division.
Management created a detailed, formal plan for restructuring and the plan was announced publicly to all the shareholders on 2 June 2022. The company has a year-end of 30 June 2022.
The following costs will be incurred:
Implementation costs R200 000
Future Operating Losses R 50 000
Advertising R 25 000
REQUIRED:
Discuss with reference to IAS37 whether the restructuring can be recognized as a provision. Indicate the amount at which it can be recognized?
Step by Step Solution
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In accordance with International Accounting Standard 37 IAS 37 Provisions Contingent Liabilities and Contingent Assets restructuring costs can be reco...
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
