Question

What are restructuring costs and where are they reported on the income statement?
Why would restructuring costs be important?

Answer 1

Restructuring costs like merger and acquisitions costs, cost of laying off employees, moving assets to new location etc. are one time or infrequent expenses incurred for reorganizing the operations and improving long term profitability and efficiency of the company.

Restructuring costs are shown as a line item on the income statement and are used to compute net income of the company.

Huge Restructuring costs are incurred by company so that the company may suffer less profit or may be losses in current year but these expenses will help company to earn good profits in future periods.