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Dicussion pg 1064

Dicussion pg 1064 - illness vacation or holidays A...

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How should compensated absences be accounted for? ***Compensated Absences are accounted for as expenditures in the fiscal period in which they are paid. Accumulated compensated absences are recorded as long-term debt for financial statement reporting purposes only. The reporting requirements under GASB Statement 34 will require the short-term portion (those that are due in one year or less) of the liability for compensated absences to be presented separately from the long-term portion. This will require a procedure to determine the amount of this short-term or current portion. The amounts reported as compensated absences are “benefits earned by employees” consisting of vacation or annual leave and compensatory or “K time” earned for overtime which can either be straight time hours or time and a half. These compensated absences are accrued based on the requirements of GASB Statement 16. (Definition) Compensated Absences - Expected payments to employees who miss work because of
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Unformatted text preview: illness, vacation, or holidays. A liability is accrued for compensation for future absences if all of the following criteria are satisfied: *Employee services have already been performed *Rights have already been vested *There is probable payment *The amount is subject to reasonable estimation. If the amount is not determinable, accrual is not possible, but footnote disclosure should be given. Sick leave is not accrued because sick leave benefits are not considered compensation until they are used when an employee is ill, not when it is accumulated. GASB 16 also requires salary-related payments to be accrued which include employer’s share of social security taxes, employer’s share of Medicare taxes, and employer’s contributions to retirement plans. Compensated absences are currently being accounted for in the General Long Term Debt Account Group....
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Dicussion pg 1064 - illness vacation or holidays A...

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