We provide the bonus provision every month and charge to Income statement and review the liability. If we find that provision of bonus is more than contractual liability then we drop the excess and reduce the staff cost for the month. Is this the right treatment s per IFRS or we should take the reversal amount as an income?
what if bonus amount is charged to income statement in 1st year and after year end and closing of financial, management decide not to pay bonus. In second year, if we drop the reserve, can we still deduct from staff cost or take an other income or comprehensive income
Bonus provision and reversal – http://www.ifrslist.com/2010/10/bonus-pr…
IAS 37.59 Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision shall be reversed.
A reversal is not income.
The provision should be written back and shown under ‘Excess provision w/back’. Excess provision cannot be netted from the expense of the 2nd year since 2nd year expense does not include the excess provision.