Abstract:

Severance pay became a main discussion issue in 1936 in Turkish Labor Law literature. Since that year, severance pay has been a conflict between employees and employers. In 1975, fund term became a main discussion issue in Turkey with the Turkish Labor Law no.1927. Severance Payment Fund has become A Legislation Draft in 2002. In the literature, there exists no study involving the impact of severance pay over the financial accounting. This study aims to determine premium rate of severance payment and to illustrate the accounting records in the framework of Legislation draft and Generally Accepted Accounting Principals. The premium rate of severance payment was estimated by using Ordinary Least Square (OLS) method with several scenarios. The results show that the appropriate rate for both sides (employees and employers) is the rate around 6%.

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