Provisions for liabilities
Real life example:
Solution - how to calculate the "provision for holidays" ...?
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Next - as at 31.12.2023 the number of days of unused holiday leaves of administrative and production staff of ABC amounted to 100 and 400 respectively,
- the average gross salary on the basis of payroll for Q4 2023 was GBP 5,000 and GBP 2,000 respectively,
- the average cost of social contributions was 15% of the payroll costs in 2023
Solution - how to calculate the "provision for holidays" ...?
- let us assume that on the average there are 22 working days in each month
- the provision amount should always be increased by a provision for the estimated cost of social contribution => 59,000 x 15% = GBP 8,850
