IFRS Case

Re structuring Costs

Pharma Co. (Pharma or “the Company”) is a U.S. subsidiary of a U.K. entity that prepares its financial statements in accordance with (1) U.S. GAAP for reporting to its U.S.-based lender and (2) IFRSs in reporting to its parent. Pharma is in the process of restructuring a business line. As part of the restructuring, the Company is considering the relocation of a manufacturing operation from its present location to a new facility in a different geographic area. The relocation plan would include terminating certain employees.

IAS 37 includes guidance for accounting for restructuring costs in accordance with IFRS. Paragraph 10 of IAS 37 defines restructuring as follows: …show more content…

to occupy 100 percent of a 146,300-square-foot building in the Bellvue area of Tulsa with a term of 10 years.

Pharma Co. plans to vacate the Plant A facility on January 31, 2015, at which time it will sign the lease termination agreement.

APPENDIX B

Inter-Office Memorandum

To: All Employees of Pharma Co.

From: Gregory Seagate, Director, Human Resources

**For internal distribution only**

December 27, 2014

Today, the leaders of Pharma Co. have determined to discontinue the research and development of our line of Live4mor drugs, which was initially publicized as the company’s response to the market place’s demand for more drugs embodying the latest in anti-aging drug technologies.

As a result of management’s decision to eliminate its activities pertaining to the Liv4mor line of drugs, we will be implementing a one-time, non-voluntary termination plan to reduce our workforce. Although management has not yet identified the specific employees to be terminated, the current restructuring plan involves a reduction of approximately 120 employees, which represents 10 percent of our workforce. The workforce reduction is expected to be completed by January 31, 2015, and is expected to cost approximately $3 million.

Our president and chief executive officer, Catherine Smith, made the following remarks this morning, “The restructuring plan that we are