trump
Background: Trump planned to involuntarily terminate 100 of the company’s employees. Employees who voluntarily sign a waiver will receive a lump-sum cash payment, but get nothing if refuse to sign it. However, all employees will be terminated whether or not they sign litigation.
Question: should Trump recognize a liability in December 31.2005?
Conclusion: A liability should be recognized in December 31, 2005.
In order to explain the reasoning, three questions should be answered.
First, what the type of benefit in this case? Two terms should be clarified to for this question.
1. Communication date. According to ACS 420-10-25-2, “an entity’s communication of a promise to provide one-time employee termination a benefit is a promise that creates an obligation at the communication date to provide the termination benefits if employees are terminated.” The December 31, 2005 in this case is the date that all employees were e-mailed of plan’ terms, which therefore should be treated as communication date.
2. One-time Employee Termination Benefits. According to ASC 42010-25-4, “An arrangement for one-time employee termination benefits exists at the date the plan of termination meets all of the following criteria and has been communicated to employees (referred to as the communication date):
a. Management, having the authority to approve the action, commits to a plan of termination.
b. The plan identifies the number of employees to be terminated, their job classifications or functions and their locations, and the expected completion date.
c. The plan establishes the terms of the benefit arrangement, including the benefits that employees will receive upon termination (including but not limited to cash payments), in sufficient detail to enable employees to determine the type and amount of benefits they will receive if they are involuntarily terminated.
d. Actions required to complete the plan indicate that it is unlikely that significant changes to the plan
Question: should Trump recognize a liability in December 31.2005?
Conclusion: A liability should be recognized in December 31, 2005.
In order to explain the reasoning, three questions should be answered.
First, what the type of benefit in this case? Two terms should be clarified to for this question.
1. Communication date. According to ACS 420-10-25-2, “an entity’s communication of a promise to provide one-time employee termination a benefit is a promise that creates an obligation at the communication date to provide the termination benefits if employees are terminated.” The December 31, 2005 in this case is the date that all employees were e-mailed of plan’ terms, which therefore should be treated as communication date.
2. One-time Employee Termination Benefits. According to ASC 42010-25-4, “An arrangement for one-time employee termination benefits exists at the date the plan of termination meets all of the following criteria and has been communicated to employees (referred to as the communication date):
a. Management, having the authority to approve the action, commits to a plan of termination.
b. The plan identifies the number of employees to be terminated, their job classifications or functions and their locations, and the expected completion date.
c. The plan establishes the terms of the benefit arrangement, including the benefits that employees will receive upon termination (including but not limited to cash payments), in sufficient detail to enable employees to determine the type and amount of benefits they will receive if they are involuntarily terminated.
d. Actions required to complete the plan indicate that it is unlikely that significant changes to the plan