C5 Employee benefits Flashcards
What are employee benefits?
All forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.
What are short-term benefits?
Employee benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service.
How are short-term employee benefits recognised?
Short-term employee benefits are recognised as a liability and an expense when an employee has rendered service during an accounting period, i.e. on an accruals basis.
Short-term benefits are not discounted to present value.
What are accumulating paid absences and how are they recognised?
Accumulating paid absences are those that can be carried forward for use in the future periods if the current period’s entitlement is not used in full (e.g. holiday pay).
The expected cost of any unused entitlement that can be carried forward or paid in lieu of holidays is recognised as an accrual at the year end.
What are non-accumulating paid absences and how are they recognised?
Non-accumulating absences cannot be carried forward (e.g. maternity leave or military service). Therefore they are only recognised as an expense when the absence occurs.
When does an entity recognise the expected cost of profit-sharing and bonus payments?
An entity recognises the expected cost of profit-sharing and bonus payments when, and only when:
* The entity has a present legal or constructive obligation to make such payments as a result of past events; and
* A reliable estimate of the obligation can be made.
A present obligation exists when, and only when, the entity has no realistic alternative but to make payments.
What are post-employment benefits?
Post-employment benefits are employee beneifts which are payble after the completion of employment.
* defined contribution plans
* defined benefit plans
What is a defined contribution plan?
