by announcing the main features of the plan to those affected by it or by

By announcing the main features of the plan to those

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by announcing the main features of the plan to those affected by it or by beginning to implement the plan. Also, the cost of the restructuring must be reasonably estimable, and the plan must be carried out within a reasonable period of time. U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred. The existence of a restructuring plan and its announcement do not necessary create a liability. Thus, the recognition of a restructuring provision and related loss may occur at a later date under U.S. GAAP than under IFRS. The S.A. Harrington publicly announced a restructuring plan in 2015 that created a valid expectation on the part of the employees to be terminated that the company will carry out the restructuring. The company estimated that the restructuring would cost $300,000. No legal obligation to restructure exists as of December 31, 2015. If the company determined to change to IFRS. The restructuring provision should be recognized when the company publicly announced a restructuring plan and created a valid expectation. 2. Pension Plan In 2013, the S.A. Harrington amended its pension plan, creating a past service cost of $60,000. The past service cost was attributable to already vested employees who had an average remaining service life of 15 years. The company has no retired employees.
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5 Under IFRS, S.A. Harrington recognizes the entire past service cost of $60,000 as an expense to net income in 2013. Under U.S.GAAP, because all of the employees affected by the plan amendment are active employees, the past service cost of $60,000 would be amortized to net income over the remaining service life of those employees at the rate of $4,000 per year ($60,000/15 years). 3. Stock options For share-based payments to employees (including stock options), the transaction should be measured at the fair value of the equity instruments granted because the fair value of the service provided by the employees generally is not reliably measurable. The fair value of stock options must be determined at the date the options are granted.
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  • Fall '14
  • Generally Accepted Accounting Principles

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