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As 15

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  • NOTE FOR PROVISION FOR GRATUITY, LEAVE ENCASHMENT ETC. LIABILITIESOF COMPANIES Your Clients Annual Financial Statements such as Balance Sheet, Profit/Loss statement etc. as on 31.03.2015 are likely to be prepared by you in the near future. Financial statements need figures attributable to Employee Benefits also. Important Employee Benefits , we are referring to in this note, are those which are of the nature of Defined Benefits. Most relevant such benefits are:- Gratuity, Leave Encashment & Pension (If applicable) Provision for the liability of the above type of benefits is to be provided in Balance Sheet and Profit/Loss Statement in accordance with Accounting Standard 15 (Revised 2005) - AS-15 (Revised 2005). This may need Actuarial Valuations. In case you require Actuarial Valuations for the above benefits so as to comply with the requirements of Accounting Standard 15 (Revised 2005), you may contact us. For more details visit our website at www.mlsodhiactuary.com In case you require our services please contact us at the following Numbers:- Mr. Tikaram Chaudhary - 9211637063 (Mob)
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  • Hi Praveen ...good job... thanks
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As 15

  1. 1. ACCOUNTING STANDARD-15 ACCOUNTING FOR RETIREMENT BENEFITS IN THE FINANCIAL STATEMENTS OF EMPLOYERS.
  2. 2. PURPOSE <ul><li>This statement deals with the accounting treatment of the cost of the retirement benefits in the financial statements of employers. </li></ul>
  3. 3. TYPES OF RETIREMENT BENIFITS <ul><li>Provident fund : </li></ul><ul><li>It involves contribution of both employer & employee to PF administered by the central government or to a separate trust created. </li></ul>
  4. 4. <ul><li>TYPES OF RETIREMENT BENIFITS </li></ul><ul><li>Superannuation/pension benefit : </li></ul><ul><li>Defined contribution scheme: The employer makes a contribution once a year. The accumulated balance of contributions and interest is used to pay the retirement benefits to the employee. The benefit available under this scheme has no relationship with the final salary or the no. of years of service put in by an employee. The benefit solely depends upon the annual contribution made by the employer. </li></ul><ul><li>  Defined benefit scheme :the benefit payable to the employee is determined with reference to factors such as: </li></ul><ul><li>Percentage of final salary. </li></ul><ul><li>Number of years of service. </li></ul><ul><li>The grade of the employee. </li></ul><ul><li>The contribution is generally expressed as a percentage of salary for the entire group of employees covered by the scheme. </li></ul>
  5. 5. <ul><li>Gratuity: Gratuity benefit is in the nature of a defined benefit scheme wherein payments are made by the employer as and when the employee leaves . However, trust funds can also be created or arrangement with insures can be made so that computed annual contributions can be made every year. </li></ul>TYPES OF RETIREMENT BENIFITS
  6. 6. ACCOUNTING TREATMENT <ul><li>The cost of retirement benefits should be accounted for in the period during which the employee renders services. Thus, accounting for retirement benefit cost when the employee leaves, i.e. on cash basis, is not appropriate . </li></ul>

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