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Companies allocate money into a contra account (to the leave liability) each period (i.e. monthly) so that its all "accounting money". Otherwise companies would
by Khaine 13y ago
Companies allocate money into a contra account (to the leave liability) each period (i.e. monthly) so that its all "accounting money". Otherwise companies would go bankrupt if too many staff took leave at a time.
That is while staff with large leave balances look bad, they don't effect the profitability of the organisation.
- yummyfajitas 13y agoIn that case there is something I don't understand. If the company has a debt and an offsetting asset pegged specifically to that use, why does it look bad? If anything, that should look good: "we owe $X to employees at 0bps interest and we have $X in the bank at 40bps."
- Khaine 13y agoIt looks bad because they have a large liability on there balance sheet. Also you have to remember that your leave entitlement stays the same if you get promoted/ pay rise so the organisation actually has to pay more then what they've offset