USA amortization of severance

[macusa]

are the costs associated with closing a regional offices and transitioning jobs to a centralized location able to be amortized? say there would be a two year project to consolidate remote locations and the company would realize the savings over time... can that severance (and other costs associated with the closures) be amortized or would it need to be recorded all at once?

 

[kirby]

Look into fasb 146. No deferral/amortization of costs.

 

[cetimm]

FAS146, Footnote 9—Paragraph 15 of Statement 88 states, “An employer that offers special termination benefits to employees shall recognize a liability and a loss when the employees accept the offer and the amount can be reasonably estimated.”

 

[bklynboy]

I would add that any retention benefits (which you may include as severence) should be accrued over the period the retention service is required beginning with the date of notification. As described above pure severance is not amortized.

You should also consider the potential impact of lease cancellations on closing the offices and other committments that may have a penalty. These would be accrued when probable and estimatable.

We went through a similar issue a few years back and can help if there are any follow-ups.