Morgan Company determined that (1) it has a material obligation relating to employees rights to receive compensation
Question:
Morgan Company determined that (1) it has a material obligation relating to employees’ rights to receive compensation for future absences attributable to employees’ services already rendered, (2) the obligation relates to rights that vest, and (3) payment of the compensation is probable. The amount of Morgan’s obligation as of December 31, 2019, is reasonably estimated for the following employee benefits:
Vacation pay ..................$100,000
Holiday pay .......................25,000
What total amount should Morgan report as its liability for compensated absences on its December 31, 2019, balance sheet?
a. $0
b. $25,000
c. $100,000
d. $125,000
Step by Step Answer:
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach