The Phelps Companys fiscal year ends on June 30. Its employees (with at least three months of experience) are entitled to 12 paid sick days annually for each calendar year beginning on January 1. An employee not taking his/her earned sick days would receive payment thereon on December 31 of that year. How should Phelps record and measure such a liability as of June 30th?

a) Provide responses for each independent case on the appropriate accounting treatment.

b) Support your responses with code sections from the FASB Accounting Standards Codification (ASC).