Our work extends the review of contractual termination benefits
highlighted by The Australian Financial Review (58) by undertaking a more detailed analysis of the contractual provisions featured in that article.
94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit and Activity (including Certain Costs Incurred in a Restructuring)." Under Issue 94-3, certain costs associated with those activities were recognized as liabilities at a plan (commitment) date, which did not meet the definition of a liability in FASB Concepts Statement No.
Standards of Governmental Accounting and Financial Reporting/3-21 Scope and Applicability of This Statement/3-7 Measurement and Recognition of Termination Benefits/8-17 Measurement/9-11 Healthcare-Related Termination Benefits/9 Non-Healthcare-Related Termination Benefits/10-11 Recognition of Termination Benefit
Liabilities and Expense in Accrual Basis Financial Statements/12-15 Recognition of Termination Benefit
Liabilities and Expenditures in Modified Accrual Basis Financial Statements/16 Effects of a Termination Benefit
on an Employer's Defined Benefit Pension or Other Postemployment Benefit Obligations/17
Smith 50 percent of his earned termination benefit
of $1,200 per month ($600 per month).
SFAS 146 nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring), which previously provided guidance in this area, and supersedes EITF 88-10, Costs Associated with Lease Modification or Termination.
The layoffs were expected to cost Extreme between $13 million and $15 million in employee-related termination benefits
, but would save the firm some $40 million in operating costs.
They are terminated at will with no post termination benefits
which is actually quite legal since the same is provided in their contracts.
1 Non-GAAP net income for the first quarter 2013 consists of GAAP net income of $519 million plus $49 million of amortization of intangibles related to the acquisition of HGST and $26 million related to employee termination benefits
and other charges.
Restructuring charges include employee termination benefits
, contract termination fees for the remaining lease payments on the Arizona office, net of potential sub-lease, and accelerated depreciation.
GAAP and IFRS closer together, significant differences still exist in the definition, recognition, and measurement of some termination benefits
. For example, U.S.
Estillore added that the company should also ensure that the termination benefits
would be given to employees, which should include half a month salary for every year of service, 13th month pay, unused leave pay and other perks or benefits.
The company expects to incur approximately $5.4 million of expense associated with employee termination benefits
, which will also be recorded in 2Q12.