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ASC reference
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Termination benefits in scope
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When to record the liability/expense
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Contractual termination benefits
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ASC 712-10-25-2 through ASC 712-10-25-3
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Benefits provided in accordance with an existing plan or agreement that specified termination benefits are due only upon the occurrence of a specific event (e.g., plant closure)
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Recorded when it is probable the employees will be entitled to benefits and the amount can be reasonably estimated
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Special termination benefits
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Benefits where the employer offers termination benefits for a short period of time in exchange for an employee's voluntary termination
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Recorded when an employee irrevocably accepts the offer and the amount can be reasonably estimated
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One-time employee termination benefits
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ASC 420-10-25-4 through ASC 420-10-25-10
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One-time involuntary termination benefits
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Recorded when the conditions specified in ASC 420, Exit or Disposal Cost Obligations, have been met, including management commitment to a plan and communication to employees. A reporting entity should immediately recognize the costs if future services are not required, or ratably over the required future service period if future services are required
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Other post-employment benefits
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ASC 712-10-25-4 through ASC 712-10-25-5
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Benefits provided in accordance with a mutually understood benefit arrangement between the employee and employer or former employee. A mutually understood benefit arrangement could be achieved through either a written plan or through a consistent past practice that would constitute a “substantive plan”
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Recorded when the existing situation or set of circumstances indicates that an obligation has been incurred, it is probable the benefits will be paid, and the amount can be reasonably estimated. Depending on the arrangement, the benefits will be recorded: (a) as the employees provide the services to earn the benefits (for benefits that vest or accumulate), or (b) using a loss contingency model
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