Question

Which of the following gives rise to the requirement to accrue a liability for the cost of compensated absences?

a. Payment is probable.
b. Employee rights vest or accumulate.
c. Amount can be reasonably estimated.
d. All of these answers are correct.

Answer 1

The correct answer is d. All of these answers are correct.

The requirement to accrue a liability for the cost of compensated absences arises when payment is probable, employee rights vest or accumulate, and the amount can be reasonably estimated.

Step-by-step explanation:

The requirement to accrue a liability for the cost of compensated absences arises when all of the following conditions are met:

1. Payment is probable: There must be a high likelihood that the company will need to pay the employees for their compensated absences.
2. Employee rights vest or accumulate: The employees must earn the right to receive compensation for their absences over time or as they work for the company.
3. Amount can be reasonably estimated: The company must be able to reasonably estimate the cost of the compensated absences based on historical data or other relevant factors.

Therefore, the correct answer is d. All of these answers are correct.