Exit or Disposal Activity

Question 1

Exit or Disposal Activity

Answer 1

Not a major strategic shift; downsizing or closing a hub

Question 2

I/S or B/S

Answer 2

B/S

Question 3

Liability

Answer 3

PV of future payments associated with closing the hub or downsizing; recognize costs related to exit or disposal

Question 4

Costs

Answer 4

Involuntary termination of employees benefits; employee relocation costs; costs to consolidate facility; costs to terminate contracts EXCEPT capital leases

Question 5

Recognized when all criteria met

Answer 5

1) Obligating event has occurred like profit is less than the budget
2) Event results in present obligation to transfer assets or provide service like need to pay the landlord to terminate the lease early
3) Little or no discretion to avoid future transfer of assets

Question 6

Mesurement

Answer 6

FV; only disposal costs recognized; future operating losses incurred as a part of an exit or disposal are recognized in the period in which they occur; prospective adjustments

Question 7

I/S

Answer 7

Exit or disposal costs related to disc operations in the disc operations otherwise in the operating income

Question 8

Disclosure

Answer 8

FN AND Face