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Basic Question 0 of 20
Which of the following statements relating to restructuring charges is false?
B. The restructuring charge is usually properly considered to be a current period expense.
C. Over-estimation of severance accrual can lead to reversals in subsequent years and a consequent increase in profitability.
D. Severance accrual results in a current period expense even though severance payments have not been made in the year of the charge.
A. Restructuring charges usually consist of a write-off component and an accrual component.
B. The restructuring charge is usually properly considered to be a current period expense.
C. Over-estimation of severance accrual can lead to reversals in subsequent years and a consequent increase in profitability.
D. Severance accrual results in a current period expense even though severance payments have not been made in the year of the charge.
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Learning Outcome Statements
identify financial reporting choices and biases that affect the quality and comparability of companies' financial statements and explain how such biases may affect financial decisions;
evaluate the quality of a company's financial data and recommend appropriate adjustments to improve quality and comparability with similar companies, including adjustments for differences in accounting standards, methods, and assumptions;
evaluate how a given change in accounting standards, methods, or assumptions affects financial statements and ratios;
analyze and interpret how balance sheet modifications, earnings normalization, and cash flow statement related modifications affect a company's financial statements, financial ratios, and overall financial condition.
CFA® 2024 Level II Curriculum, Volume 2, Module 16.