Your Money. Personal Finance. Your Practice. Popular Courses. What is a Restructuring Charge? Key Takeaways A restructuring charge is a one-time cost that a company pays when it reorganizes its business. It is a short-term expense the company undertakes with an eye toward boosting long-term profitability. Restructuring charges are usually harmless but can sometimes be manipulated by creative accountants. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
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Rationalization may also refer to the process of becoming calculable. Enron Enron was a U. Understanding Revenue Revenue is the income generated from normal business operations. What Everyone Should Know About Layoffs A layoff occurs when an employer suspends or terminates a worker, either temporarily or permanently, for business rather than performance reasons. Cash Charge Definition A cash charge is a charge against company's earnings, which reduces net income, and is accompanied by a cash outflow.
Partner Links. Related Articles. Financial Analysis Pro Forma Statements vs. Investopedia is part of the Dotdash publishing family. The Restructuring Reserve shall be reduced in an amount equal to the Restructuring Charges paid at the time such Restructuring Charges are paid and eliminated upon Borrowers providing evidence satisfactory to Agent in its reasonable discretion that no more Restructuring Charges will be incurred and so long as any such Restructuring Charges are not increased.
Restructuring Reserve means such reserve which shall be an Availability Reserve as the Administrative Agent from time to time determines in its discretion as being appropriate to account for certain restructuring activities undertaken by the Loan Parties as of the Fifth Amendment Effective Date , but subject to Section 2. Restructuring Reserve has the meaning set forth in Schedule 6. Restructuring Date means, with respect to a Restructured Bond or Loan, the date on which a Restructuring is legally effective in accordance with the terms of the documentation governing such Restructuring.
Restructuring Period means, whether or not there are Rated Securities at the time a Restructuring Event occurs, the period of 90 days starting from and including the date on which that Restructuring Event occurs; and. Restructuring Transactions means the transactions described in Article IV. B of the Plan.
Restructuring Costs means the costs, including both direct and indirect, of restructuring activities. Restructuring costs that may be allowed include, but are not limited to, severance pay for employees, early retirement incentive payments for employees, employee retraining costs, relocation expense for retained employees, and relocation and rearrangement of plant and equipment.
Operating Reserve means generation capacity or load reduction capacity which can be called upon on short notice by either Party to replace scheduled energy supply which is unavailable as a result of an unexpected outage or to augment scheduled energy as a result of unexpected demand or other contingencies. For the sake of clear arrangement, the reserve is recommended to be maintained in a stand-alone analytical account. Tax aspects of accounting for restructuring reserves The restructuring reserve is not a tax-deductible expense.
For corporate tax calculation purposes, the tax base must be increased by the amount of the restructuring reserve. Expenses become tax-deductible when they are actually incurred in relation to the restructuring process — i.
On those grounds, a temporary tax difference, i. Furthermore, we would like to note that a reserve for various items related to employee remuneration in restructuring may not necessarily include its current component of social security and health insurance, such as when severance pay is concerned.
For this reason, we consider it necessary to pay attention to individual items of which the reserve is composed. Approach to the presentation in the financial statements The balance, creation and use of reserves have their required positions in the balance sheet, or the profit and loss account. If the restructuring in the reporting period in which the restructuring reserve is recognised for the first time has implications to other areas such as depreciation or recognition of provisions for fixed assets or inventory , it is appropriate to disclose relevant information on the effect of the restructuring in the notes to the financial statements in a comprehensive and cohesive manner, including a summary of implications for other areas concerned.
Furthermore, restructuring will, by its nature, be usually an extraordinary activity, i. In creating the restructuring reserve, the prudence concept as one of the basic accounting principles needs to be taken into account. The article is part of dReport — December , Accounting news. There has been an evolution in the technological architecture of entities across the world.
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