CAS 7 - Employee Cost

Question 1

Definition

Answer 1

1. Aggregate of all kinds of consideration paid or payable or provisions made for future services rendered by employees of an enterprise
2. Employee- permanent, temp, part time and contract
3. Contract employee-direct employee-payroll
4. Does not include - contractor- contract with entity

Question 2

Principles of measurement

Answer 2

1. Valued - gross pay - all benefits- paid and payable
2. Bonus- All types- paid- employer to employee
3. Remuneration to KMP and ED- part of cost
4. Remuneration to Non exec Dir- Admin OH

Question 3

Treatment of Voluntary separation cost

Answer 3

1.

Question 4

Treatment of idle time

Answer 4

1. Normal Idle time - Time spent/lost- reg breaks,paid, weekly holidays- part of employee cost
2. Abnormal idle time - Strikes.lockouts,fire, natural calamities and other abnormal reasons-not part of cost

Question 5

General principles

Answer 5

1. Finance cost is not included
2. Abnormal cost is not included
3. Imputed cost is included ( only materials)
4. Credit or recoveries shall be reduced
5. Subsidy, grant or incentives shall be reduced
6. Penalties ,damages, fines paid to stat auth not cost
7. Cost-standard rates- variance is part of cost

Question 6

Assignment of cost

Answer 6

1. Direct- based on time consumed or number of emp or similar identifiable measure
2. If indirect- based on suitable basis including time estimates
3. Recruitment, training , other - overheads- assigned- functions

Question 7

Presentation

Answer 7

1. Direct employee cost shall be presented as a seperate cost head in cost statement
2. Indirect employee cost shall be presented as a part of overheads based on function in a cost statement

Question 8

Disclosure

Answer 8

1. Employee cost relating to capital or job work shall be disclosed seperately
2. Separation cost payable
3. Abnormal cost excluded
4. Penalties , damages, fines, not included
5. Credit or recoveries subsidy grant reduced
6. Related party transactions
7. Forex transactions