1. Welfare fees payable are the funds that the enterprise prepares to use for the welfare of its employees. The sources of funds used for employee welfare in Chinese enterprises according to regulations include withdrawals from expenses and withdrawals from after-tax profits. The employee welfare fees extracted from expenses are mainly used for the personal welfare of employees, and are treated as a liability in accounting; the welfare fees extracted from after-tax profits are mainly used for collective welfare facilities, and are treated as ownership in accounting. rights and interests (i.e. public welfare fund).

2. Employee welfare fees extracted from expenses are calculated at 14% of the total wages of employees. The composition of the total wages is consistent with the statistical caliber, and no deductions are made. Employee welfare fees are mainly used for employees’ medical expenses (including medical insurance premiums paid by enterprises for participating in employee medical insurance), salaries of medical staff, medical expenses, travel expenses for employees injured on the job to go to other places for medical treatment, employees’ living allowances, employee bathrooms, and haircuts. Salaries of staff in rooms, kindergartens, and nurseries, etc.

3. For employee welfare funds extracted from expenses, a separate "welfare fee payable" account is set up for accounting. The welfare fees withdrawn are distributed according to the positions of the employees: welfare fees for personnel engaged in production and operation are recorded in the cost; welfare fees for administrative personnel are included in management expenses, etc. When actual payment is made, the welfare fees payable are offset. The balance of welfare fees payable at the end of the period is reflected separately in the current liabilities item of the "Balance Sheet".