Gratuity Accounting

Tara Khandelwal (Student CA Final ) (298 Points)

19 August 2021  

What are the accounting entries for Gratuity as per AS -15?

1) Whether creation of Provision for Gratuity is mandatory every year? If so whether the following entry can be passed?

 Gratuity Expense A/c - Dr

To Provision for Gratuity - Cr

2) Whether the Gratuity has to be contributed by opening a Bank A/c and whether opening of Bank A/c is mandatory. If so whether the following entry can be passed?

Gratuity Fund A/c - Dr (Under Asset)

To Bank A/c

(or)

Provision for Gratuity - Dr

To Bank A/c

3) Whether the same entries will be applicable in case of Contribution to LIC Scheme for Gratuity? Whether provision needs to be created for the same?