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Gratuity provision

13 October 2016

Respected Forum,

Our company is making payment to X (IRDA controlled) for the gratuity on yearly basis, in that scenario do we need to make a provision for gratuity, in our yearly balance-sheet. Question arised as we are making the payment, hence is liability required.

Somesh

Regards And Thanks In Advance

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V P Narasimhan (Accounts Manager) (791 Points)
Replied 07 November 2016

Gratuity A/c Dr

To Gratuity Payable A/c Cr.

Note: If the amount is being paid by the 3rd party for which you are making reimbursement treat them as Creditor & square off at the time of making payment.