Cradock plc has operated a pension scheme for its employees for several years. Under the terms of the scheme, Cradock plc is contractually obliged to make an annual contribution equal to 7% of total employee remuneration in the year. Cradock plc has no further contractual obligations under the terms of the pension scheme, and the pension paid to former employees is based solely on the future performance of the pension fund. Cradock plc paid £500,000 into the pension scheme in the year ended 30 September 2023. In the year ended 30 September 2023, Cradock plc paid wages and salaries of £8 million. In addition, staff are contractually entitled to a profit related bonus each year. A profit-based bonus of £3 million for the year ended 30 September 2023, will be paid out to employees on 23 December 2023.

Advise the directors on how the above employment benefits should be accounted for in Cradock plc’s financial statements for the year ended 30 September 2023.

Answer rating: 100% (QA)

Answer In Cradock plcs financial statements for the year ended 30 September 2023 the employment bene... View the full answer