In January 2017, Orange Ltd.estimated that its year-end bonuses to executives for calendar 2017 would be $640,000.In February 2017, $580,000 was paid in bonuses for the 2016 year-end.The estimate for 2017 is subject to year-end adjustment.How much bonus expense should be reflected in Orange's interim income statement for the three months ended March 31, 2017?

Question

Quizplus · Accepted Answer

The bonus expense for the interim period should be based on the estimated annual bonus. Therefore, $640,000 estimated for the year should be allocated over the four quarters, resulting in $160,000 for the first quarter.