Compensated Absences
Vacation and Sick Leave
Employees often earn paid vacation, holidays, and other compensated absences. A liability is recognized if the benefits vest or accumulate, payment is probable, and the amount can be reasonably estimated.
- Vacation pay.
- Paid holidays.
- Personal leave.
- Certain sick leave benefits.
Note
Non-vesting benefits that expire if unused may not require accrual.
Summary
Companies accrue compensated absences when employees earn rights that will likely require future payment.