Instructions: Perform research using the FASB codification for the accounting issue below.
You will insert your answer into the final exam when you are taking the final exam on D2L. Make sure you have done this research prior to opening the final exam on D2L
Smith, Inc. is an online a personal-shopping service and clothing retailer with a fiscal year end of September 30, 2020. Smith, Inc. is a publicly traded company. On July 15, 2020, Smith Corporation has decided to exit the California market and to restructure some of the corporate operations. It is not anticipated that any changes will be made to restructuring plan.
On August 1, 2020 Smith offered 100 employees located in California the opportunity to relocate to the Chicago office as of October 31, 2020. Smith will be paying all moving/relocation costs for these employees. The employees were required to accept or decline the offer by September 15, 2020. Based upon this deadline 40 of the employees accepted the offer to relocate. Smith incurred $750,000 of relocation costs for these employees in October, 2020 (no relocation costs were incurred prior to October, 2020).
Accounting Issue: The CFO has asked you to research when Smith is required to recognize the $750,000 relocation costs for this restructuring plan. He is unsure if the company should recognize/accrue for these costs in:
GAAP Codification Reference: _______________________
Guidance: (cut and paste the guidance)
Based upon the guidance when is Smith required to recognize the relocation costs?
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