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Accounting treatment of gratuity


ACCOUNTANT (Student)     04 June 2020

ACCOUNTANT
Student 
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Please explain this problem... What is the accounting treatment? 

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sabyasachi mukherjee   05 June 2020

sabyasachi mukherjee

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As per law or Gratuity Act 1972 it is defined as the amount payable to any employee employed in any establishment .

Now accounting treatment for gratuity is providing for gratuity .
The calculation is on the basis of last drawn salary.
Actually employers pay as mentioned in the gratuity act.
basis salary plus deafness allowance multiplied completed years of service multiples by 15 /26

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ACCOUNTANT (Student)     06 June 2020

ACCOUNTANT
Student 
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Sorry sir.. I'm trying to attach a file but it is not getting uploaded... Thank you for your explanation

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CA Saloni (Deputy Manager-Accounts & GST Consultant)     06 June 2020

CA Saloni
Deputy Manager-Accounts & GST Consultant 
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We make provision for gratuity at year end.

Gratuity Dr 

To provision for gratuity (long term & short tern)

 

When the employee leaves, the provision account is debited and bank is credited.


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