Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Restructuring provision
- This topic has 3 replies, 2 voices, and was last updated 3 years ago by Stephen Widberg.
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- March 15, 2021 at 12:35 pm #614463
Sir in case of restructuring , constructive obligation for restructuring arises and therefore provision of restructuring should be recorded if Detailed formal plan is prepared and approved, and Plan is publicly announced (i.e announced to affected parties or their representatives) Or plan has been implemented?
March 16, 2021 at 3:24 pm #6145321. Detailed plan – yes
2. Announced – yes.
3. Implemented – no.March 30, 2021 at 6:54 pm #615537Yes sir as per IAS 37 there should be a detailed formal plan and the plan has been announced to affected parties or their representatives.
But I am getting confused in this because of examiners answer in specimen paper 1 which says that :
IAS 37 Provisions, Contingent Liabilities and Contingent Assets states that a provision for restructuring should be made only when a detailed formal plan is in place and the entity has started to implement the plan, or announced its main features to those affected. A board decision is insufficient. Even though there has been no formal announcement of the restructuring, Kutchen has started implementing it and therefore it must be accounted for under IAS 37.In this para is it is written that entity has started to implement the plan
March 31, 2021 at 12:01 pm #615590If the plan is already being implemented, it must have been announced – that’s life!
You would have a terrible shock if you turn up to work to find that the factory has been demolished – they would have warned you.
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