ABC Ltd.generated one million Canadian dollars in profits this year.ABC Ltd.decides to place 200,000 Canadian dollars (20 percent of pre-tax profits)in a bonus pool.In previous years,this figure has ranged from zero to 50 percent of pre-tax profits.What type of formula is ABC Ltd.using to determine contributions into the pool?

Question

Quizplus · Accepted Answer

ABC Ltd. is using a discretionary formula to determine contributions into the bonus pool as the percentage varies from year to year depending on the company's performance, indicating the use of management's discretion.

ABC LtdGenerated One Million Canadian Dollars in Profits This Year