October 30, 2016 admin

Indemnities to Dealers Employees

Adjustments to Income

NON US INDEMNITIES TO DEALERS EMPLOYEES ADDITIONS TO INCOME ACCOUNT
9060

ACCOUNT EXPLANATION
Accrual or payments made, as an indemnity, to employees dismissed from the corporation, in accordance with the rules established in the law or in the dealer’s policies whichever is greater.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Monthly estimation of indemnities accrual (if dealer decides not to create a reserve then actual payments change the credit account to 1002 instead of 2411) CD
    Indemnities to Dealers employees 9060
      Accrued Bonus and Indemnities 2411
COMMENTS
  • Termination of personnel has legal and tax implications, legal and tax counsel should be obtained before any decision.
  • Any termination of personnel requires approval of the General Manager.
  • Dealers have two options:
    1. To register in this account the actual payments made for indemnities at time of payment.
      — or —
    2. Create a monthly reserve for this liability – then the actual payments should be recorded charging the accrual.