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When doing a past question there was some redundancies made early in the year.
These should not be accounted for in staff costs but where should they be expensed to.The redundancies have already taken place so it’s not an issue of provisions or when they are recognised, as they have already been recognised.
I’m guessing the issue is where they have been recognised.Also the staff costs would be overstated but I’m thinking profit won’t be misstated as one way or another the expenses still hits the p&l.
Are you referring to the Q Eagle Group in the S18 exam? Please ALWAYS give a suitable reference.
They should be expensed – so if you read something that challenges your correct knowledge – you need to read carefully what is stated. The answer is NOT saying that the redundancy costs should not be in staff costs. It’s saying that you were given a reason to suppose that staff costs would be LOWER this year (the cost of making 2% of workforce redundant would be much less that 2% of the warehouse payroll) – so the fact that staff costs are HIGHER (albeit only slightly – by 1·1%) suggest that some OTHER NON-staff costs have been misclassified into staff costs in error.
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