Module 4

Question 1

what is the main objective of IAS 19?

Answer 1

prescribe the accounting and disclosure for employee benefits. IAS 19 requires an entity to recognize:
* A liability when an employee has provided service in exchange for employee benefits to be paid in the future; and
* An expense when the entity consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.

Question 2

what provision is covered under IAS 26?

Answer 2

Accounting and Reporting by retirement benefit plans

Question 3

Name and describe the 4 types of benefits.

Answer 3

1- short-term= expected to be settled wholly before 12 months after the end of the annual reporting period
2- post-employment= payable after the completion of employment
3- long-term= all benefits other than short-term, post-employment, and termination
4- termination= provided in exchange for the termination of employment

Question 4

What is the accounting entry for short-term benefits?

Answer 4

Debit= expenses for employee benefits (profit or loss) or cost of another asset. expense must be undiscounted.
Credit= liability or accrued expenses or cash paid

Question 5

What are the 2 types of post-employment benefits?

Answer 5

defined contribution- employee assumes risk
defined benefit- employer assumes risk

Question 6

What is the accounting entry for defined contribution plans?

Answer 6

Debit= expenses for employee benefits (profit or loss) or cost of another asset. expense must be undiscounted.
Credit= liability or accrued expenses or cash paid

Question 7

What are the 4 steps that need to be taken re: accounting for defined benefit plans?

Answer 7

1- determine deficit or surplus: difference between the present value of the defined benefit obligation and fair value of plan assets; discount the benefit; deduct the fair value of plan assets
2- determine amount in statement of financial position
3- determine amount in the statement of comprehensive income
4- determine re-measurements in other comprehensive income

Question 8

The accounting for long-term benefits is the same as those for defined benefit plans except what?

Answer 8

All items are represented in the statement of profit or loss; nothing goes to comprehensive income

Question 9

When do you recognize the liability and expense for termination benefits?

Answer 9

at the earlier of:
1- when the company can no longer withdraw the offer of those benefits
2- when the company recognizes the cost for a restructuring