When a company gives employees rights to receive compensation for absences and the payment for such absences is probable and the amount can be reasonably estimated the company should accrue a liability.

Question

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When an employer provides a compensation plan for employee absences and the payment is likely and the amount is determinable, the employer should record a liability for the estimated amount owed to the employee for the period when they are absent.

When a Company Gives Employees Rights to Receive Compensation for Absences