C5 IAS 19 Employee Benefits Flashcards
What is the short term benefits?
Expected to be settled wholly before 12 months after the end of the annual reporting period in which the ee render the related svs
Accounting treatments for short term benefits
Recognized as a liability and an expense
On accrual basis
Not discounted
Accumulating paid absences
Can be carried forward for use in future if the CP’s entitlement is not used in full.
Accrual basis
Non- accumulating paid absence
Cannot be Carried forward.
Recognized as an expense when the obsence occurs.
When recognize Profit-sharing and bonus plans?
The entity has a present legal or constructive obligation to make such payments as a result of past events
Reliable estimate
What method used to Measure Defined benefits plan
Projected unit credit method:
Each period of svs as giving is rise to an additional unit or benefit entitlement, and measures each unit separately to Build up final liability/obligation.
Interest cover time - interest expense should be recognized
What are the Actuarial assumptions?
To estimate the size of the future benefits:
Demographic
Financial: future salary
Discounting - current service cost
The increase in the present value of the obligation resulting from employee service in the current period.
Dr CSC PL
Cr PV defined benefit obligation SOFP
Past service cost
Definition and treatment
Change in PV obligation for employee service in prior periods, resulting from a plan amendment or curtailment
Charge or credited immediately to Profit or loss
Re measurements
Cause
And recognition
Arising from annual valuation of obligation and assets.
On obligation, differences between actuarial assumptions and actual experience during the period, or changes in actuarial assumptions.
On assets, differ between actual return on plan assets and amounts included in net interest.
Settlements
Definition and acc treatment
Is a transaction that eliminates all further legal or constructive obligations for a part or all of the benefits provided under a defined benefit plan.
The gains or loss is recog in P/L when it works occurs: Dr PV oblig Cr FV plan assets Cr cash (paid) Cr/Dr profit or loss (difference)
The Asset ceiling test
Pension fund is a separate entity.
Deficits— must top up
Surplus— could reduce contribution
Not be stated at more than their recoverable amount. Net pension asset to be measured at the lower of:
Net Defined benefit asset
PV of any refunds/ reduction of future contributions available from the pension plan
