Since 1999, Procter & Gamble (P & G) reported in each quarter restructuring charges in 2005 for organizing a five-year comprehensive restructuring program. In 1995, the Financial Accounting Standards Board Emerging Issues Task Force (EITF) issued defines a consensus opinion (EITF 94-3) that if certain restructuring costs can be recorded as a liability and increased financial statement specified. But as in other areas of accounting, there was a considerable discretion i … Read more »

Since 1999, Procter & Gamble (P & G) reported in each quarter restructuring charges in 2005 for organizing a five-year comprehensive restructuring program. In 1995, the Financial Accounting Standards Board Emerging Issues Task Force (EITF) issued defines a consensus opinion (EITF 94-3) that if certain restructuring costs can be recorded as a liability and increased financial statement specified. But as in other areas of accounting, there were at a considerable discretion as to when and how to calculate a company restructuring costs on the result. In December 2001, P & G was halfway through Organization 2005. If P & G management predicts the remaining cost of the program with enough detail to recognize a liability for the balance of FY 2002 Organization 2005 charges? Or should be recognized for the remaining cost of the program in each quarter continues, as the program progressed? How should the management to exercise its discretion, and how to explain it, the cost for investors?
«Hide

from
Mary E. Barth,
Susan MacKenzie
Source: Stanford Graduate School of Business
27 pages.
Release date: 01 February, 2002. Prod #: A183-PDF-ENG
Procter & Gamble: Organization 2005 Accounting for HBR case solution

[related_post themes="flat"]