Question: The board of directors of Chestnut Inc. approved a restructuring plan on November 1, Year 1. On December 1, Year 1, Chestnut publicly announced its plan to close a manufacturing division in New Jersey and move it to China, and the company's New Jersey employees were notified that their jobs would be eliminated. Also on December 1, Year 1, to ensure an orderly transition, management promised a termination bonus of $10,000 to any employee who remains with the company until his or her position is terminated in the fourth quarter of Year 2. Chestnut estimates it will pay termination bonuses to 120 employees for a total of $1,200,000. The present value of the estimated termination bonus is $1,000,000.
Required: Determine the provision that should be recognized for Chestnut's restructuring plan. Identify the dates on which journal entries should be made and the amounts to be recorded.