INTERMEDIATE ACCOUNTING
1st Edition
ISBN: 9781264920532
Author: SPICELAND
Publisher: MCG
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Chapter 13, Problem 13.7Q
Salaries of $5,000 have been earned by employees by the end of the period but will not be paid to employees until the following period. How should the expense and related liability be recorded? Why?
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ABC Company determined that it has an obligation relating to employees' rights to receive
salaries for future absences, arising from services already rendered. This obligation is related
to vesting rights, and payment for future absences is probable. At year-end, the obligations are
reasonably estimated as follows:
Vacation Pay: 1,100,000
Sick Pay: 900,000
How much should be reported as liability for compensated absences? *
When determining the liability for compensated absences, the amount should be based on1. an average of the last three year's rates of pay when employees earn the right to the compensated absences.2. the current or future rates (if known) of pay expected to be paid when employees use compensated time.3. the PV (present value) of the amount expected to be paid in future periods.
ABC Company determined that it has an obligation relating to employees’ rights to receive salaries for future absences, arising from services already rendered. This obligation is related to vesting rights, and payment for future absences is probable. At year-end, the obligations are reasonably estimated as follows:· Vacation Pay: 1,100,000· Sick Pay: 900,000
How much should be reported as liability for compensated absences?
A. Zero
B. P 900,000
C. P 1,100,000
D. P 2,000,000
Chapter 13 Solutions
INTERMEDIATE ACCOUNTING
Ch. 13 - What are the essential characteristics of...Ch. 13 - Prob. 13.2QCh. 13 - Bronson Distributors owes a supplier 100,000 on...Ch. 13 - Bank loans often are arranged under existing lines...Ch. 13 - Prob. 13.5QCh. 13 - Prob. 13.6QCh. 13 - Salaries of 5,000 have been earned by employees by...Ch. 13 - Prob. 13.8QCh. 13 - Prob. 13.9QCh. 13 - Prob. 13.10Q
Ch. 13 - Prob. 13.11QCh. 13 - Prob. 13.12QCh. 13 - Long-term obligations usually are reclassified and...Ch. 13 - How do IFRS and U.S. GAAP differ with respect to...Ch. 13 - Prob. 13.15QCh. 13 - Prob. 13.16QCh. 13 - Prob. 13.17QCh. 13 - Prob. 13.18QCh. 13 - Suppose the analysis of a loss contingency...Ch. 13 - Prob. 13.20QCh. 13 - Distinguish between the accounting treatment of a...Ch. 13 - At December 31, the end of the reporting period,...Ch. 13 - After the end of the reporting period, a...Ch. 13 - Prob. 13.24QCh. 13 - Prob. 13.25QCh. 13 - Prob. 13.26QCh. 13 - Prob. 13.27QCh. 13 - Prob. 13.28QCh. 13 - Bank loan; accrued interest LO132 On October 1,...Ch. 13 - Non-interest-bearing note; accrued interest LO132...Ch. 13 - Determining accrued interest LO132 On July1,...Ch. 13 - Commercial paper LO132 Branch Corporation issued...Ch. 13 - Non-interest-bearing note; effective interest rate...Ch. 13 - Sales tax LO133 DuringDecember, Rainey Equipment...Ch. 13 - Prob. 13.12BECh. 13 - Prob. 13.13BECh. 13 - Contingency LO135, LO136 Skill Hardware is the...Ch. 13 - Contingency LO135, LO136 Bell International can...Ch. 13 - Prob. 13.16BECh. 13 - Prob. 13.17BECh. 13 - FASB codification research LO133, LO134, LO135...Ch. 13 - Current noncurrent classification of debt; Sprint...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.14ECh. 13 - Extended warranties LO135, LO136 Carnes...Ch. 13 - Disclosures of liabilities Indicate (by letter)...Ch. 13 - Prob. 13.11PCh. 13 - Prob. 13.2DMPCh. 13 - Prob. 13.3DMPCh. 13 - Prob. 13.4DMPCh. 13 - Prob. 13.18DMPCh. 13 - Real World Case 1319 Contingencies LO135 Real...Ch. 13 - Prob. 1CCTCCh. 13 - Prob. 2CCTC
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- Which of the following does not describe a purpose of the employee's earnings records? a. They are part of the payroll package required to be sent to the IRS on an annual basis. b. They are used to prepare internal management analyses. c. They are used to determine where cumulative wages are in relationship to wage bases (caps ) for various taxes, such as OASDI, FUTA, and SUTA. d. They are used to aid in completion of year - end informational returns, such as W -2s.arrow_forwardWhen an employer does not have a sophisticated time-keeping system, it is valid to accrue a percentage of wages at end-of-period based on:a. it is never valid to estimate an end-of-period adjustment.b. a percentage based on the previous period's payroll (for example. 4 out of 5 days = 80% x prior payroll).c. a percentage that external auditors provide the payroll clerk.d. a percentage suggested by the IRS.arrow_forwardWhich of the following does not meet the definition of a liability? a. The signing of a 3-year employment contract at a fixed annual salaryb. An obligation to provide goods or services in the futurec. A note payable with no specified maturity dated. An obligation that is estimated in amountarrow_forward
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