With regards to restructuring a business, a liability is only recognized after the entity has incurred the cost of the restructuring.

Question

Quizplus · Accepted Answer

A liability for restructuring costs is recognized when the entity has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. The commitment to a restructuring plan and communication of that plan to those affected can create a constructive obligation before the actual costs are incurred.

With Regards to Restructuring a Business, a Liability Is Only