EMPLOYEE BENEFITS Flashcards
These are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment
Employee Benefits
These are classifications of employee benefits
- Short-term employee benefits
- Post-employment benefits
- Other long-term employee benefits
- Termination benefits
These are employee benefits (other than termination benefits) that are expected to be settled wholly twelve months or less after the end of the annual period in which the employees render the related service.
Short-Term Employee Benefits
These are employee benefits (other than termination benefits and short-term employee benefits that are payable after the completion of employment.
Post-Employment Benefits
These are employee benefits provided in exchange for the termination of an employee’s employment as a result of either:
- An entity’s decision to terminate an employee’s employment before the normal retirement.
- An employee’s decision to accept an offer of benefits in exchange for the termination of employment
Termination Benefits
If the company paid an amount less than the undiscounted amount of benefits, what shall this be recorded as?
Liability
If the company paid an amount greater than the undiscounted amount of benefits, what shall this be recorded as?
Asset
(Prepaid Expense)
These entitlements that are carried forward and can be used in future periods if the current period’s entitlement is not used in full.
Accumulating Paid Absences
The type of accumulating paid absence wherein the employees are entitled to a cash payment for unused entitlement upon leaving the entity.
Vesting
The type of accumulating paid absence wherein the employees are not entitled to a cash payment for unused entitlement upon leaving the entity.
Non-Vesting
These entitlements that cannot be carried forward and they lapse if the current period’s entitlement is not used in full and do not entitle employees to a cash payment for unused entitlement upon leaving the entity.
Non-accumulating
How do you solve for the total employee benefits expense when it comes to accumulating paid absences that are vesting?
Current Employee Benefits Expense + Accrued Employee Benefits = TOTAL EBE
(Current Employee Benefits Expense = Used Entitlements x Current Salary Rates)
(Accrued Employee Benefits = Unused Entitlements x Expected Salary Rates)
How do you solve for the total employee benefits expense when it comes to accumulating paid absences that are non-vesting?
Current Employee Benefits Expense x Accrued Employee Benefits = TOTAL EBE
(Current Employee Benefits Expense = Used Entitlements x Current Salary Rates)
(Accrued Employee Benefits = Unused Entitlements less unused entitlements of resigning employees x Expected Salary Rates)
How do you solve for the total employee benefits expense when it comes to non-accumulating paid absences
Used entitlements x current salary rates
When does an entity recognize the expected cost of profit-sharing and bonus payments?
- The entity has a present legal or constructive obligation to make such payments (as a result of past events)
- A reliable estimate of the obligation can be made
What is the journal entry for short term employee benefits when the amount paid is less than the undiscounted amount of benefits?
Dr Employee Benefits Expense
Cr Cash
Cr Liability for Employee Benefits
What is the journal entry for short term employee benefits when the amount paid is more than the undiscounted amount of benefits?
Dr Employee Benefits Expense
Dr Prepaid Expense for EB
Cr Cash
What is the journal entry for accumulated paid absences?
Dr EBE
Cr Cash
Cr Accrued EB (Liability)
Note: Accrued Liab is the leave not taken on accumulated.
What is the journal entry for non-accumulating paid absences?
Dr EBE
Cr Cash
What is the journal entry for the announcement of a profit-sharing plan?
Dr EB Expense
Cr Liability for EB
How do you compute for the bonus before bonus and tax?
B = BR x NI
How do you compute for the bonus after bonus but before tax?
B = BR x (NI - B)
How do you compute for the bonus before bonus but after tax?
B = BR x (NI - T)
T = TR x (NI - B)
How do you compute for the bonus after bonus and after tax?
B = BR x (NI - B - T)
T = TR x (NI - B)
