Accounting entry on gratuity

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 October 2011 Sir

I have made a provision of gratuity in the Balance Sheet 2009-10 but during 2010-11 some employees left the job without completing 5 years so that their amount will be reverse while calculating the gratuity provision for the year 2010-11.

Pls. advise

Thanks

CA Neha Jain

CA Neha Jain (Expert)
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21 October 2011 Yes, the provision as at 31 Mar 11 will have to be made for live employees on that date.

It will be determined by acturial valuation.

for example, if opening liability was Rs.100/- and the valuation as at 31 Mar 11 comes to Rs.95/-, than Rs.5 will be credited to P&L account.

Please refer AS 15- Employee Benefits for detailed accounting