Under ASC 710-10-25-1, an employer shall accrue aliability for employees' compensation for futureabsences if all the following conditions are met:I. The employer's obligation relating to employees'rights to receive compensation for future absences isattributable to employees' services alreadyperformed.II. The paid absence can be taken in a later year-thebenefit vests (will be compensated even ifemployment is terminated) or the benefit can beaccumulated over time.III. Payment of the compensation is probable.IV. The amount can be reasonably estimated.If the amount cannot be reasonably estimated,None of the other answers is correct.O There is no need to disclose it.The employer shall accrue a liability in balancesheet.The employer shall disclose it in the notes tofinancial statements.

A liability shall be accrued if it is to be settled in the near future.

Answered: liability for employees' compensation…

Business

Accounting

liability for employees' compensation for future

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Under ASC 710-10-25-1, an employer shall accrue a
liability for employees' compensation for future
absences if all the following conditions are met:
I. The employer's obligation relating to employees'
rights to receive compensation for future absences is
attributable to employees' services already
performed.
II. The paid absence can be taken in a later year-the
benefit vests (will be compensated even if
employment is terminated) or the benefit can be
accumulated over time.
III. Payment of the compensation is probable.
IV. The amount can be reasonably estimated.
If the amount cannot be reasonably estimated,
None of the other answers is correct.
O There is no need to disclose it.
The employer shall accrue a liability in balance
sheet.
The employer shall disclose it in the notes to
financial statements.

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