Use the following information to answer Questions Sick leave vests at the completion of the fifth year of employment, and unused sick leave is paid in cash upon termination or retirement. During the fiscal year ended 6/30/18, city employees who are paid from the general fund earned $2.8 million of sick leave, of which $1.0 was taken. Of the balance, the city estimates that $0.2 million will be taken in the next 60 days, $0.6 million will be taken in the next five years, $0.4 million will vest, and $0.6 million will never be taken.
-The amount of sick leave liability that should appear on the general fund balance sheet at 6/30/18 is
A) $1.2 million.
B) $0.4 million.
C) $0.2 million.
D) No liability should appear.

Question

Quizplus · Accepted Answer

In governmental accounting, liabilities for sick leave are typically not recognized in the general fund until they are due and payable. Since the sick leave vests after five years and is not currently due, no liability should appear on the general fund balance sheet.

Use the Following Information to Answer Questions Sick Leave Vests