Question

Time Remaining 31 minutes 38 seconds00:31:38 AskItem 4Item 4 Time Remaining 31 minutes 38 seconds00:31:38 M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2021, M's unadjusted balance of liability for compensated absences was $30,600. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $153 per day. In its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report

Answer 1

$30,600

Step-by-step explanation:

On an average, each employee will earn $153 per day. The amount of Liability for compensated absences in M Corporation will be

= 200 Days * $153 per day.

= $30,600

According to No. 16 Accounting for Compensated Absences, liability for compensated absence should be measured at balance sheet date for those employees who are currently eligible to receive termination payment.