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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Is this a constructive obligation
The company provides a $20 meal for each employee per day as stated in the contract signed by the employees.
Is this considered a constructive obligation?
Can the company form a monthly provision for estimated expense for the subsequent month?
ie.
Average present employees per day: 75
Net working days per month: 22
$20 x 75 x 22 = $33,000
What makes you think this is only constructive? It’s apparently in the contract of employment (according to your post)
That makes it a legal obligation
Why would you need to make a provision? If by the end of the month / year all the meals have been allocated / eaten, why provide?
On a matching basis, expenses recognised to match the time period to which that expense relates, then …… no provision in my mind
OK?
Ok. Thank you.
You’re welcome