Employee Benefits Flashcards
What IAS standard are employee benefits?
IAS 19
What are employee benefits?
Employee benefits are all forms of consideration given by an entity in exchange for services rendered by employees.
List the 8 Examples of employee benefits
1) Monthly salary
2) Paid annual and sick leave
3) Medical care
4) Housing, free or subsidised goods and services
5) Post-employment pensions, medical care, life insurance
6) Equity compensation e.g. share options (IFRS2 - SBP)
7) Termination benefits
8) Long-service leave or benefits
When should employee benefits be recognized?
Employee benefits should be recognised in the financial year in which the service is rendered
irrespective of when payment is made: accrual concept.
Why is Employee Benefit Reporting Important?
It is important:
1) For the Assessment of company risk
2) For the Assessment of future cash flows
3) For Employee morale and satisfaction
4) For Identifying future obligations
5) Because it Affects leverage of company
6) Because it Affects daily operating activities
What are the 4 Types of Benefits?
1) Short Term Employee Benefits
2) Post-Employment Benefits
3) Long-term Employee Benefits
4) Termination Benefits
What are short term employee benefits?
Expected to be settled within 12 months after the financial reporting period in which the service is rendered
What are examples of short term employee benefits?
salary
sick leave
annual leave
housing allowance
car allowance
profit sharing
and bonus plans
What are Post-Employment Benefits?
Payable after completion of employment
What in an example of a Post-Employment Benefit?
Pension
what are Long-term Employee Benefits?
Payable while employee is still employed but are Expected to be settled more than 12 months after the financial reporting period in which the service is rendered
what is an example of a Long-term Employee Benefit?
long-service award (leave, cash etc.)
What are termination benefits?
Retrenchment packages
What are Compensated Absences recognized as?
If they are accumulating then you recognize a provision
If they are non-accumulating, there is no need to recognize a provision
What are the 2 types of Post-Employment Benefits?
Funded and Unfunded
