27 October 2014
sir I want to ask about gratuity provision.
suppose we have made provision of Rs . 100 . But as per actuarial valuation it is 90 . so now we have to reduce provision amt by 10 . If yes than what entry we have to pass.
thanks in advance.
You may not reverse if amount is not material enough & also considering situation on valuation date.
E.G. Valuation done as on March 14 in Aug 14, where in between Mar & Aug discount rate got reduced, so there is higher liability in future, so reversing liability may require you to provide additional provision in next FY.
CAclubindia
