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SaulGroup, Inc., a U.S.-based corporation, currently uses U.S. GAAP to prepare its consolidated financial statements. SaulGroup is considering switching to IFRS and asking for your

SaulGroup, Inc., a U.S.-based corporation, currently uses U.S. GAAP to prepare its consolidated financial statements. SaulGroup is considering switching to IFRS and asking for your help in assessing the impact this change will have on its financial statements. SaulGroup’s accounting principles differ from IFRS in the following areas– restructuring, pension plan, stock options, revenue recognition, and bonds payable. Instructions: Please respond to the following questions in each scenario:

1. Restructuring Provision

On December 1, 2017 the management of SaulGroup, Inc. announced its plan to close a technical support division in California and move it to Vietnam. All the jobs in this division will be eliminated by the end of 2018. To compensate the employees who would stay with the company until the last day of their position, the company offered a termination bonus of $15,000 to each employee. SaulGroup estimates it will pay the termination bonuses at the end of 2018 for a total of $450,000. The present value of the estimated termination bonus is $400,000.

a. How is the restructuring treated under (1) U.S. GAAP and (2) IFRS in 2017?

b. Prepare the necessary journal entries.

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