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How to record for a bonus paid in year X, for performance on X-1, but that had not been accrued?

2014 - no accrual booked 2015 - bonus paid for 2014 performance

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

In 2015 the transaction should hit Retained Earnings and Accrued Bonus on 1/1, then Accrued Bonus/Cash on payment date.

In 2014 you should restated the financials, accruing the bonus, thus the Retained Earning number end in 2014 will equal 2015

Anonymous
(Senior Vice President, Construction Claims and Consulting) |

thank you Wayne

Anonymous
(SVP) |

Was the bonus a target or guaranteed bonus or purely a discretionary bonus? If the bonus was purely discretionary and was not granted X, you should be able to record as a X expense. However, if it was a target or guaranteed and the obligation truly was created in X-1 by the employees' performance/service, you likely have an error. Restatement/correction of an error depends, at that point, on materiality.

Richard Baikie
Title: Director of Finance
Company: Super King Markets
(Director of Finance, Super King Markets) |

In addition to materiality, are you under audit or review and what are your financials used for? if the use is limited, say for Bank financing, and you are not under audit, restatement might be avoided through footnotes/disclosures.

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