EX1: Except forwater parks, Swimmers operate also 2 theme hotels in Aqualandia. Hotels are held under non-cancellable operating lease that expires in 3 years. Swimmers' managers estimate that due to overall decrease in number of visitors, hotels will make annual loss of 1 mil. EUR each year if continuing operations. Swimmers may also prematurely terminate the lease but with penalty of 2 mil. EUR.

What should Swimmers Co. do in its financial statements in relation to this situation?

EX 2: NiceHome Co. runs 2 main divisions: production of wooden accessories and metal accessories. On 30 September 20X1, board of directors approved formal restructuring plan that involves shifting some production away from metal accessories to wooden accessories due to current developments of customers' preferences.

Managers have prepared details of restructuring plan and have publicly announced it on 30 November 20X1. An implementation of the plan should start on 1 February 20X2 and complete 31 January 20X3.

Managers have estimated the costs of restructuring as follows:

1. Carrying amount of redundant machines for metal accessories production - 2 000 000 EUR, revenue from their sale (based on offer received recently) - 1 300 000 EUR

2. New computers in accounting department - 50 000 EUR

3. Cost of retraining employees from metal accessories - 100 000 EUR

4. Cost of severance payments to redundant employees from metal accessories - 400 000 EUR

What should NiceHome do in its financial statements in relation to this situation?