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M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2021, M's unadjusted balance of liability for compensated absences was $30,000. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $150 per day. In its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report?

Respuesta :

letmeanswer

$30000 is the amount of liability for compensated absences

Explanation:

The Employee benefit plan of M Corp provides that, each employee will get 15 paid vacation days.

And if any employee unutilized these vacation days, he can carry over these vacation days to next years indefinitely, and employees of M Corporation are also provided with the other option to encash those Vacation days.

So, in this scenario, at the end of December 2016, M's unadjusted balance of liability towards vacation days are found to be "200 DAYS".

And also provided that, on an average, each employee will earn $186 a day.

So, amount of Liability for compensated absences in M Corporation = 200 Days multiply with $150 per day.

= $30000/-

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