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Axe Company's directors decided on November 1,2021 to restructure the entity's operations as follows: - Factory A would be closed and put on the market
Axe Company's directors decided on November 1,2021 to restructure the entity's operations as follows: - Factory A would be closed and put on the market for sale. - Employees working in Factory A would be retrenched on November 30, 2021 and would be paid their accumulated entitlements plus six months' wages - Some employees working in Factory A would be transferred to Factory B, which would continue operating. JelD.01 - On December 31, 2021, the following transactions and events had occurred: - The retrenched employees have left, and their accumulated entitlements have been paid. However, an amount of P1,000,000, representing a portion of the six months' wages for the retrenched employees, has still not been paid. - Costs of $300,000 are expected to be incurred in transferring the remaining employees to their new work in Factory B. The transfer is planned for January 5, 2022. - One employee, Crystal Maiden, remains in order to complete administrative tasks relating to the closure of Factory A and the transfer of employees to Factory B. Crystal Maiden is expected to stay until January 31, 2022. Her salary for January will be P50,000 and her retrenchment package will be P150,000, all of which will be paid on the day she leaves. Crystal Maiden would spend 60% of her time administering the closure of Factory A, 30% on administering the transfer of employees to Factory B, and the remaining 10% on general administration. What total amount should be recognized as restructuring provision on December 31,2021 ? a. P1,480,000 c. 1,500,000 b. 1,200,000 d. 1,180,000
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