West Company determined that it has an obligation relating to employees’ rights to receive compensation for future absences attributable to employees’ services already rendered. The obligation relates to rights that vest, and payment of the compensation is probable. The amounts of West’s obligations as of December 31, 2006, are reasonably estimated as follows:
|
Vacation pay |
$110,000 |
|
Sick pay |
80,000 |
In its December 31, 2006 balance sheet, what amount should West report as its liability for compensated absences?
- $0
- $ 80,000
- $110,000
- $190,000