Liability for Employee Benefits - Non-Current

This is where gratuity, accumulated leave encashment and similar retirement benefits earned by staff but payable only years later are kept. The Labour Act 2074 requires 8.33 percent of basic salary as gratuity, and an audited company accrues that cost every month rather than waiting for the day an employee leaves. The accrual debits Gratuity and Retirement Benefits and credits this ledger, so the balance grows as service builds up and falls when a leaver is paid. Amounts actually due in the next twelve months belong in the current partner account. If gratuity is only booked when paid, earlier years show too much profit and a large surprise cost appears in the year of payment.

Closing balance = Opening + Benefit cost accrued for the year - Benefits paid to leavers - Portion moved to current

1. 01Compute the year's gratuity and leave accrual from the payroll register, 8.33 percent of basic for gratuity.
2. 02Go to Invoicing > Journal Entry > New dated the last day of the period.
3. 03Debit Gratuity and Retirement Benefits and credit Liability for Employee Benefits - Non-Current.
4. 04Submit. The entry below posts.
5. 05When a staff member leaves, pay by Journal Entry: Dr this ledger, Cr Bank.
6. 06Review the balance on Financial Reports > General Ledger against the payroll schedule each Ashadh end.

Post by Journal Entry at year end from the actuarial or Labour Act computation. Paid out through Payment Entry when staff leave.

Dr Gratuity and Retirement Benefits Rs 1,80,000, Cr Liability for Employee Benefits - Non-Current Rs 1,80,000 for the year's gratuity accrual.