Pharma Company-Restructuring Cost - 892 Words

Case 10-3 Restructuring Costs Pharma Co. (Pharma or â€Å"the Company†) is a U.S. subsidiary of a U.K. entity that prepares its financial statements in accordance with (1) U.S. GAAP for reporting to its U.S.-based lender and (2) IFRSs in reporting to its parent. Pharma is in the process of restructuring a business line. As part of the restructuring, the Company is considering the relocation of a manufacturing operation from its present location to a new facility in a different geographic area. The relocation plan would include terminating certain employees. IAS 37 includes guidance for accounting for restructuring costs in accordance with IFRSs. Paragraph 10 of IAS 37 defines restructuring as follows: [A] programme that is planned and†¦show more content†¦4. The cost to dismantle the existing manufacturing operation is estimated to be $1 million. In the jurisdiction in which Pharma operates its current facility, there is no legal obligation for dismantling plants when abandoned. Pharma has not historically dismantled its plants when abandoned but decided to make an exception. In a press Copyright 2009 Deloitte Development LLC All Rights Reserved. Case 10-3: Restructuring Costs Page 2 release, the Company has stated its intention to dismantle the existing operation. The costs to reassemble the operation in the new facility have not yet been finalized. Required: †¢ †¢ In reporting to its U.K. parent under IFRSs, how should Pharma account for the above restructuring program for the year ended December 31, 2011? In reporting to its U.S.-based lender in accordance with U.S. GAAP, how should Pharma account for the restructuring program for the year ended December 31, 2011? Copyright 2009 Deloitte Development LLC All Rights Reserved. Case 10-3: Restructuring Costs Page 3 APPENDIX A Press Release Pharma Co. Announces Early Lease Termination Tulsa – 12/15/2011 – Pharma Co., a leading pharmaceutical developer, today announced its plan to terminate the lease on its Plant A facility located in Bellvue, Oklahoma, as part of its management restructuring and cost-cutting measures. Earlier today, Pharma Co. entered into anShow MoreRelatedResructuring Cost880 Words   |  4 PagesIFRS Case Re structuring Costs Pharma Co. (Pharma or â€Å"the Company†) is a U.S. subsidiary of a U.K. entity that prepares its financial statements in accordance with (1) U.S. GAAP for reporting to its U.S.-based lender and (2) IFRSs in reporting to its parent. Pharma is in the process of restructuring a business line. As part of the restructuring, the Company is considering the relocation of a manufacturing operation from its present location to a new facility in aRead MoreRestucturng1670 Words   |  7 PagesPharma Co Date: June 18, 2016 Prepared by: John B. Owens Viewed by: Joseph Walsh Issue: Determine proper accounting treatment for restructuring program costs under GAAP for the year ended December 31, 201X. Background: Pharma is in the process of restructuring a business line. As part of a restructuring, the Pharma is considering the relocation of a manufacturing operation from its present location to a new facility in a different geographic area. The relocation plan would includeRead MorePharma, Co617 Words   |  3 PagesSolution for the Case 10-3 - Restructuring Cost Pharma Co. should account for the restructuring program in different ways for the U.K parent and to U.S.-based lender. A. With respect to IFRS, company should use IAS 19 and 37. According to the IAS 19, paragraphs 133 and 134, entity should recognize termination benefits when company terminates the employment of employees before normal retirement date and company has detailed formal plan for termination. 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