On October 1, Year 1, the board of directors of Zelman, Inc. approved a restructuring plan. On December 1, Year 1, Zelman announced its plan to close a manufacturing division in California and move it to Vietnam. All the jobs in this division will be eliminated by the end of Year 2. The company offered a termination bonus of $10,000 to each affected employee who would stay with the company until the end of Year 2. Zelman estimates it will pay the termination bonuses at the end of Year 2 for a total of $1 mil. The present value of the estimated termination bonus is $850,000.
a) Discuss the provision that should be recognized for Zelman's restructuring plan under (1) U.S. GAAP and (2) IFRS in Year 1.