CERTYNEX IFRS ACADEMY

Hovel SA announces in November the closure of a factory. The individual redundancy payments offered to employees can no longer be withdrawn from 15 November. The plan also includes site restoration costs, unrelated to staff (case facts). Which analysis is consistent with the boundary between IAS 19 and IAS 37?

The whole restructuring, payments included, falls under IAS 37: a single provision is recognised on the date the factory closure plan is announced, before any irrevocable commitment.

The payments fall under IAS 19, but they are recognised when actually paid, like the entity's other long-term benefits.

The payments fall under IAS 37 because they result from a restructuring; IAS 19 applies to the other staff costs.

The redundancy payments fall under IAS 19, at the earlier of the two dates; site restoration falls under IAS 37.