Gratuity
This query is : Resolved
27 October 2014
sir I want to ask about gratuity provision.
suppose we have made provision of Rs . 100 . But as per actuarial valuation it is 90 . so now we have to reduce provision amt by 10 . If yes than what entry we have to pass.
thanks in advance.
CA R SEETHARAMAN
(Expert)
27 October 2014
The entry is
Provision for gratuity Dr 10
To provision written back cr 10
Provision for gratuity Dr 10
To provision written back cr 10
27 October 2014
Hi
You may not reverse if amount is not material enough & also considering situation on valuation date.
E.G. Valuation done as on March 14 in Aug 14, where in between Mar & Aug discount rate got reduced, so there is higher liability in future, so reversing liability may require you to provide additional provision in next FY.
Thanks
You may not reverse if amount is not material enough & also considering situation on valuation date.
E.G. Valuation done as on March 14 in Aug 14, where in between Mar & Aug discount rate got reduced, so there is higher liability in future, so reversing liability may require you to provide additional provision in next FY.
Thanks
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