Abacus Ltd. has decided to terminate 10 employees and offers them each 10,000 of termination benefits on 1 September 20X4. This offer is not part of a wider restructuring in the scope of IAS 37. The offer will be available for 60 days. 5 employees accept the offer on 30 September 20X4 and 5 employees accept the offer on 15 October 20X4. When does Abacus Ltd. recognize a liability and expense for these termination benefits?
A. 50,000 at 30 September 20X4 and 50,000 at 15 October 20X4, when the employees accept the offer
B. 100,000 at October 31, 20X4, when the employees can no longer accept the offer
C. 100,000 at 30 September 20X4, when the first group of employees accept the offer
D. 100,000 at 1 September 20X4, when the offer is first made available
Abacus Ltd. should recognize a liability and expense for the termination benefits when the employees' entitlement to the benefit becomes unconditional, which is when the offer is communicated to them. Since the offer was made available to all eligible employees on 1 September 20X4, and it was unconditional once the employees were informed of the offer, Abacus Ltd. should recognize a liability and expense at that time.
Therefore, the correct answer is:
D. 100,000 at 1 September 20X4, when the offer is first made available.
