Question
Cates Computing Systems develops and markets commercial software for personal computers andworkstations. Three situations involving compensation for possible future absences of Cates'semployees are described below.
Cates Computing Systems develops and markets commercial software for personal computers andworkstations. Three situations involving compensation for possible future absences of Cates'semployees are described below.
a. Cates compensates employees at their regular pay rate for time absent for military leave,maternity leave, and jury time. Employees are allowed predetermined absence periods for eachtype of absence.
b Members of the new product development team are eligible for three months' paid sabbaticalleave every four years. Five members of the team have just completed their fourth year ofparticipation.
c. Company policy permits employees four paid sick days each year. Unused sick days canaccumulate and can be carried forward to future years.
Required:
1. What are the conditions that require accrual of an expense and related liabilityfor employees' compensation for future absences?
2. Foreach of the three situations, indicatethe circumstances under which accrualofan expenseand related liabilityis warranted.
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