Provision for bonus should be recognised in the year it accrues, charged against profit with adjustments next year. A provision for bonus must be recognised in the accounts of the year to which the bonus relates, as a charge on profit so the reported profit gives a true and fair view. Differences between the provision and the subsequent payment should be adjusted in the following year-either in the appropriation account or in the profit and loss account-with a note that the adjustment relates to the preceding year.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Provision for bonus should be recognised in the year it accrues, charged against profit with adjustments next year.
A provision for bonus must be recognised in the accounts of the year to which the bonus relates, as a charge on profit so the reported profit gives a true and fair view. Differences between the provision and the subsequent payment should be adjusted in the following year-either in the appropriation account or in the profit and loss account-with a note that the adjustment relates to the preceding year.
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