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Year-end BONUSES can be anticipated for interim reporting purposes if and only if:
AThe bonus is a legal or constructive obligation (past practice making it so) AND (b) a reliable estimate of the obligation can be made
BThe interim period is the last quarter of the year
CApproval of the audit committee is obtained
DManagement intends to pay them
Answer & Solution
Correct answer: A. The bonus is a legal or constructive obligation (past practice making it so) AND (b) a reliable estimate of the obligation can be made
Ind AS 19 obligation criteria must be met: legal or constructive obligation + reliable estimate. Discretionary bonuses (no legal/constructive obligation) and bonuses with no reliable estimate are NOT anticipated even if management plans to pay.
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