Summary Business Accounting

Question:

The accrual of restructuring costs creates obligations (liabilities) referred to as exit or disposal cost

obligations.

Required:

1. Obtain the relevant authoritative literature on exit or disposal cost obligations using the FASB’s

Codification Research System. You might gain access at the FASB website ( www.fasb.org ). What is

the Codification topic number that addresses this issue?

2. What is the specific citation that addresses the initial measurement of these obligations?

3. How are these obligations and related costs to be measured?

4. What is the specific citation that describes the disclosure requirements in the notes to the financial

statements for exit or disposal obligations?

5. List the required disclosures.



Answer:



Requirement 1

The accounting standards topic number that addresses exit or disposal cost obligations is FASB ASC

420: “Exit or Disposal Cost Obligations.”



Requirement 2

The specific citation that addresses the initial measurement of these obligations is FASB ASC 420–10–

30–1: “Exit or Disposal Cost Obligations–Overall–Initial Measurement.”



Requirement 3

A liability for a cost associated with an exit or disposal activity is measured initially at its fair value in

the period in which the liability is incurred.