Retirement benefits and why it is shown in annual report, Financial Accounting

Retirement benefits

1)      Provident fund and family pension:

a.       Contribution to PF and PPF are provided for and payments in respect thereof are made to the relevant authorities.

2)      Gratuity:

a.       Gratuity liability is determined on the basis of actuarial valuation.

The P&L account of the company contains contribution to provident, gratuity and other funds as an expense.

Possible reasons as to why these are shown in the annual report as expenses

1)      The company could possibly get tax benefits by shown showing these items as expenses.

2)      The company may possibly want to indicate the fact that it is taking care of its employees by providing them with these instruments for security of its employees.

3)      The company may have had to provide these because of certain laws of the land, which require it to apportion a certain amount of money for this reason.

Other PMIR related items

1)      It is mentioned that the remuneration of the directors is the basic wages.

2)      It is mentioned that the nature of employment of directors is contractual.

3)      The annexure to the auditor's report says that the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund and Employees state insurance.

Posted Date: 7/30/2012 8:31:41 AM | Location : United States

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