Financial reporting developments
A comprehensive guide
Exit or disposal cost obligations
Revised April 2022
To our clients and other friends
Accounting Standards Codification (ASC) 420,
Exit or Disposal Cost Obligations
, addresses the financial accounting and reporting for costs associated with exit or disposal activities. Costs associated with an exit or disposal activity that are covered by ASC 420 include, but are not limited to, one-time involuntary termination benefits and certain contract termination costs. This publication summarizes the accounting literature on accounting for exit or disposal activities, provides our interpretive guidance and reflects our experience in practice with ASC 420. This publication also highlights guidance issued by the Financial Accounting Standards Board (FASB) in Accounting Standards Update (ASU) 2016-02,
Leases (Topic 842)
because this ASU amends ASC 420 to exclude costs to terminate a lease from the scope of ASC 420. We hope this publication will help you understand and apply the accounting for exit or disposal activities. EY professionals are prepared to assist you in your understanding and are ready to discuss your particular concerns and questions. April 2022
Financial reporting developments
Exit or disposal cost obligations | i
Contents
Contents
Financial reporting developments
Exit or disposal cost obligations | ii