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Gratuity Provision

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(Querist)
09 September 2009 Hi,

As per the company policy gratuity will be payable after completion of 5 years so why every year we need to provision. If employee resigned before completion of 5 years it is not required to pay the gratuity so please clarify why we have to provision gratuity.
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CA CS CIMA Prakash Somani

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CA CS CIMA Prakash Somani (Expert)
09 September 2009 Had you been aware of the definition of provision yo would not have ask this Q. Provision is for fiture expected liabilities only.
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Manmohan ACA, CS

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Manmohan ACA, CS (Expert)
09 September 2009 2 Reasons


1. accounting should be done assuming business as going concern

2. Prudance concept
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