Hi,
The company entered in to LIC group gratuity scheme and paid premium to LIC based on their actuarial
valuation every year.
Premium paid was accounted as expense in P&L account and no other accounting entries were passed.
In current year when i saw the statement from LIC, it was mentioned the gratuity fund available was Rs.50 Lakh, Actuarial valuation for gratuity was Rs.60 Lac. Hence, send the demand for amount of Rs.10 lac for current year.
For current year, Is it enough if i account payment of Rs.10 lac in P& L account.
If i close the scheme at the year end saying that i myself handle the gratuity through a separate trust, will
LIC refund that Rs.60 Lac available in fund?
If that is the case, that Rs.60 Lac is our money lying with LIC and receivable on closure of scheme.
Don't we have to account this receivable in balance sheet?
No provision was also appearing in balance sheet for gratuity as i simply accounted the premium payment
in P&L account.
Please help me with accounting entries that have to be passed at year end to show the picture
correctly in financial statements.
CAclubindia
