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Dear Tutors
I want to ask about Restructuring CostsI dont know how to treat this when the note is “The restructuring costs in the trial balance represent the cost of a major restructuring of the company to improve competitiveness and future profitability”
Is it because of uncertainty of improved capacity, we won’t treat this as capital expenditure ? there is no further note about this, which is very confusing
Thanks ^^
Restructuring costs are revenue expenditure.
They are not directly related to non-current assets – they are costs involved in (for example) combining divisions in order to cut costs.
If as a result non-current assets are bought or sold, then these are capital items and are dealt with in the normal way.
However the restructuring costs will be things like paying outside advisers and paying severance pay to employees that are dismissed as a result.
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