Reference no: EM132869404

Question 1: Sparky Corporation has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days per year. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2020, Sparky determined that there were 200 total vacation days earned but not taken as of year end. Of these 200 days, 183 days had been earned in 2020, and the remainder had been carried over from 2019. Sparky's employees earned an average wage rate of $15 per hour in 2019 and $17.50 per hour in 2020. Each employee works 8 hours per day. In its December 31, 2020 balance sheet, what amount of liability for compensated absences is Sparky required to report?