In January 2011, Post, Inc.estimated that its year-end bonus to executives would be $720,000 for 2011.The actual amount paid for the year-end bonus for 2010 was $660,000.The estimate for 2011 is subject to year-end adjustment.What amount, if any, of expense should be reflected in Post's quarterly income statement for the three months ended March 31, 2011?

Question

Quizplus · Accepted Answer

The estimated year-end bonus for 2011 is $720,000. Since this is an annual estimate, the expense should be recognized evenly over the four quarters. Therefore, for the quarter ended March 31, 2011, the expense should be $720,000 / 4 = $180,000.