Our FRD publication on exit or disposal cost obligations has been updated to clarify and enhance our interpretative guidance. Contract cost guidance . If only the held-for-sale criteria are met (i.e., the disposal does not meet the strategic shift and/or major effect criteria), adjustment to prior-period balance sheet presentation is not required. A reset password link has been sent to your registered email address. IFRS 15 also includes guidance related to contract costs. 420-10-45 Other Presentation — Deloitte Q&As . In addition to these “one-off” initiatives, the recurring “blocking and tackling” of the year-end financial reporting process remains, which for many organizations will be performed remotely for the first time. 16 Jul 2020 PDF. The amount for which these obligations and related costs are measured. Additionally, vacating leased space with plans to sublease the space in the future does not constitute an abandonment of the ROU asset. Exit or Disposal Cost Obligations, addresses the financial accounting and reporting for costs associated with exit or disposal activities. However, any third-party fees should be presented as operating cash outflows because these payments are expensed and not considered debt issuance costs since there is no new issuance of debt. For example, when a lessee has a significant remaining lease term, it may be difficult to support abandonment, especially when a market participant would likely attempt to economically benefit from the leased space at some point in the future (e.g., through subleasing or alternative use). M&A trends and tips for finance teams, Buying or developing new software? Next, regardless of whether asset groups change, the lessee should consider whether its assets (asset groups) are impaired. In many situations, a lessee may be uncertain as to whether it will sublease the vacated leased space. cost with fair value option for some elements). Your go-to resource for timely and relevant accounting, auditing, reporting and business insights. Involuntary employee termination benefits pursuant to a one-time benefit arrangement that, in substance, is not an ongoing benefit arrangement or an individual deferred compensation contract b. In an effort to raise capital and increase liquidity, there has been an increase in the number of companies evaluating strategic sales of assets and businesses. Journal entries to record inventory transactions under a perpetual inventory system, Journal entries to record inventory transactions under a periodic inventory system, Disposal of Property, Plant and Equipment, Research and Development Arrangements, ASC 730, Distinguishing Liabilities from Equity, ASC 480, Fair Value Measurements and Disclosures, ASC 820, Exit or Disposal Cost Obligations, ASC 420, Costs of software to be sold, leased, or marketed, ASC 985, Revenue Recognition: SEC Staff Accounting Bulletin Topic 13, ASC 605, Servicing Assets and Liabilities, ASC 860, Translation of Financial Statements, ASC 830, Consolidation, Noncontrolling Interests, ASC 810, Consolidation, Variable Interest Entities, ASC 810, Compensation: Stock Compensation, ASC 718, Asset Retirement and Environmental Obligations, ASC 410, Journal entry to record the collection of accounts receivable previously written-off, Journal entry to record the write-off of accounts receivable, Journal entry to record the estimated amount of accounts receivable that may be uncollectible, Journal entry to record the collection of accounts receivable, Investments-Debt and Equity Securities, ASC 320, Transfers of Securities: Between Categories, ASC 320, Overview of Investments in Other Entities, ASC 320, Investments: Equity Method and Joint Ventures, ASC 323, Investments in Debt and Equity Securities, ASC 320, Journal entry to record the sale of merchandise on account, Accounting Changes and Error Corrections, ASC 250, Income Statement, Extraordinary and Unusual Items, ASC 225, Presentation of Financial Statements, Discontinued Operations, ASC 205, Presentation of Financial Statements, ASC 205, Generally Accepted Accounting Principles, ASC 105, Journal entry to record the sale of merchandise in cash, Journal entry to record the purchase of merchandise, Journal entry to record the payment of rent, Generally Accepted Accounting Principles (GAAP), Journal entry to record the payment of salaries, Extraordinary and Unusual Items, ASU 2015-01, Journal entry to record the purchase of equipment, Journal entry to record the investment by owner. 2019 - 2020 PwC. Temporarily idling a ROU asset - for example, leaving leased space unoccupied with plans to return at a future date - is not considered an abandonment. On December 9, 2020, Canopy Growth Corporation (the "Company") announced the closure of five of its Canadian production sites as part of its plan to reduce operating costs, improve margins and align its production capacity with the current demand of the industry. Some of the most popular podcasts from this quarter include: For all of our podcasts on today’s most compelling accounting and financial reporting issues, subscribe to our podcast feed on your podcast platform of choice. Such plans to sublease or abandon leased space carries accounting complexities that can be easily overlooked. On this front, we are providing reminders for. It is for your own use only - do not redistribute. {{email.isIA2DeactivatedOrLocked ? '' Generally, software costs will be presented as follows: Depreciation / amortization expense (cost of revenue), *  Presentation of this expense depends on whether the company utilizes the software to support internal processes (e.g., general and administrative) or directly used to provide a service to customers (cost of revenue), **  Presented in the same line item as fees for the associated cloud-computing service, The above highlights only touch the surface of considerations when accounting for software costs. Consider removing one of your current favorites in order to to add a new one. In addition, the FASB issued an exposure draft on October 20, 2020 on proposed Targeted Improvements to. Either of these pillars, if adopted by global consensus or on a unilateral basis, would result in significant consequences for many multinational companies. To activate, a validation email has been sent to your registered email address.. Companies should also keep in mind, as applicable, the impact of supply chain financing programs on liquidity and cash flows. ... Exit or Disposal Cost Obligations, with additional guidance for public companies in SAB Topic 5P, Restructuring Charges. For more information on applying the discontinued operations model, listen to our.