PAS 19

• Entitlement to compensated absences is either accumulating or non-accumulating
• Accumulating - can be carried to future periods if not used. (i.) Vesting - monetized; (ii.) Non-vesting - not monetized
• Non-accumulating - forfeited if not used
• Accumulating and vesting - all unused absences are accrued
• Accumulating and non-vesting - only the unused absences expected to be used are accrued
• Non-accumulating - not accrued; absences are recognized as expense when they occur.
• Types of employee benefits under PAS 19: (a) Short-term, (b) Post-employment, (c) Other long-term and (d) Termination.
• Post-employment benefit plans are either (a) Defined contribution plan or (b) Defined benefit plan.
• The accounting for defined contribution plans is straightforward - the employer recognizes the agreed fixed amount of contribution as retirement benefit cost after the end of each period that the employees have rendered service.
• The accounting for defined benefit plans is complex - it requires actuarial valuations using the projected unit credit method.
• Other long-term employee benefits are accounted for like defined benefit plans except that all the components of the defined benefit cost are recognized in profit or loss.
• The obligation to pay termination benefits arises from the employer's act of terminating an employee rather than from employee service.
• Steps in the accounting for defined benefit plans

  1.Determine the deficit or surplus

  If FVPA < PV of DBO, difference is deficit

  If FVPA > PV of DBO, difference is surplus

  2. Determine the net defined benefit liability (asset)

  > Net defined benefit liability = deficit

  > Net defined benefit asset = lower of surplus and 'asset ceiling'

  3. Determine the components of the defined benefit cost to be recognized in P/L and OCI.