Thread StarterStar Ca
Sir, as per definition of LIABILITY, means there should be out flow of resources, but here where is outflow of resources.
ESOP will be opened for a term as prescribed by the management, those eligible participants can apply for their share... the term mentioned above will be one or two year as the case maybe. Thus, while closing the accounts at the end of a period the amount charged to ESOP outstanding account will be liability since, it is a liability of company upon allotment of shares. And you had asked that the definition of the liability there should be an outflow of resources, here the amount standing to outstanding ESOP account is charged to P&L account, thus there is an expensing of such amount. I hope that your query is clear. If there is any mistakes please feel free to correct me since im too a student.