TRUEBLOOD 12-9
cmeasurement date). Because the accounting under Opinion 30 was based on the intended actions of management at a plan date, future operating losses and other future costs that did not meet the definition of liabilities were recognized as liabilities under that Opinion. The Board’s conceptual framework, which sets forth the definition of a liability, was developed subsequent to the issuance of Opinion 30.
111. Under Issue 94-3, future costs directly associated with the discontinuance (restructuring) of an existing activity that meet the definition of exit costs in Issue 94-3 are recognized as liabilities at the date on which the criteria for a qualifying exit plan are met (commitment date). Issue 94-3 defines exit costs as future costs that (a) are not associated with or will not be incurred to generate revenues following an entity’s commitment to an exit plan and (b) are incremental to other costs incurred by the entity in the conduct of its previous activities and will be incurred as a direct result of that plan. That definition does not extend to the discontinuance of an existing activity those provisions of Opinion 30 that recognized future operating losses as liabilities. However, the accounting under Issue 94-3, like the accounting previously under Opinion 30, is based on the intended actions of management at a plan date. As a result, future costs that meet the definition of exit costs are recognized as liabilities under Issue 94-3 even though some of those items might not meet the definition of a liability.
112. To reduce inconsistencies in accounting for obligations associated with disposal activities and address concerns raised by constituents, the Board decided to include certain obligations associated with a disposal activity in the scope of this Statement and reconsider the guidance in Issue 94-3. Disposal activities covered by this Statement are those that arise from an entity’s commitment to a plan to (a) dispose of long-lived assets and (b)
111. Under Issue 94-3, future costs directly associated with the discontinuance (restructuring) of an existing activity that meet the definition of exit costs in Issue 94-3 are recognized as liabilities at the date on which the criteria for a qualifying exit plan are met (commitment date). Issue 94-3 defines exit costs as future costs that (a) are not associated with or will not be incurred to generate revenues following an entity’s commitment to an exit plan and (b) are incremental to other costs incurred by the entity in the conduct of its previous activities and will be incurred as a direct result of that plan. That definition does not extend to the discontinuance of an existing activity those provisions of Opinion 30 that recognized future operating losses as liabilities. However, the accounting under Issue 94-3, like the accounting previously under Opinion 30, is based on the intended actions of management at a plan date. As a result, future costs that meet the definition of exit costs are recognized as liabilities under Issue 94-3 even though some of those items might not meet the definition of a liability.
112. To reduce inconsistencies in accounting for obligations associated with disposal activities and address concerns raised by constituents, the Board decided to include certain obligations associated with a disposal activity in the scope of this Statement and reconsider the guidance in Issue 94-3. Disposal activities covered by this Statement are those that arise from an entity’s commitment to a plan to (a) dispose of long-lived assets and (b)