Gratuity

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2010 Dear Sir/Madam

What is Actuariation method to be followed for provision of Gratuity liability ?
Does the provisioning aspects differs if the Company is SMC (Small medium company)?

Thanks in advance

CA Kishore Tallam

CA Kishore Tallam (Expert)
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05 October 2010 Projected unit credit method is followed by Actuary in valuing gratuity liability. The method does not change eventhough it is an SMC. Only disclosures in notes to accounts will change. For an SMC, only assumptions followed in determining the liability is required to disclosed. In case of Non SMC all the details like cost reco, liability reco, etc., to be disclosed in notes.