PAS_19

• PAS 19


  Employee Benefits
• Four categories of employee benefits under PAS 19

  • Short-term employee benefits
  • Post-employment benefits
  • Other long-term employee benefits
  • Termination benefits
• Employee benefits


  All forms of consideration given by an entity in exchange for service rendered by employees
• Short-term employee benefits


  • Employee benefits (other than termination benefits) that are due to be settled within 12 months after the end of the period in which the employees render the related service
• Recognition and measurement of short-term employee benefits

  When an employee has rendered service, the entity shall recognize the undiscounted amount of short-term employee benefits expected to be paid as a liability (accrued expense), as an asset (prepaid expense) if the amount paid is in excess, and as an expense, unless the employee benefit forms part of the cost of an asset
• Accumulating compensated absences


  Those that are carried forward and can be used in future periods if the current period's entitlement is not used in full. They may be vesting (employees entitled to cash payment) or non-vesting (employees not entitled to cash payment)
• Non-accumulating compensated absences


  Those that are not carried forward. No liability or expense is recognized until the absences occur
• Post-employment benefits


  Employee benefits (other than termination benefits) that are payable after the completion of employment
• Defined contribution plan


  Post-employment benefit plan where the reporting entity's obligation for each period is determined by the amounts to be contributed for that period
• Defined benefit plan


  Post-employment benefit plan where actuarial assumptions are required to measure the obligation and the expense, and there is a possibility of actuarial gains and losses
• Accounting for defined contribution plan

  The accounting is straightforward as no actuarial assumptions are required
• Accounting for defined benefit plan


  The accounting is complex as actuarial assumptions are required and there is a possibility of actuarial gains and losses
• Accounting procedures for defined benefit plans

  Step 1: Determine the deficit or surplus

  Step 2: Determine the Net defined benefit liability (asset)

  Step 3: Determine the defined benefit cost
• Current service cost


  Increase in the present value of a defined benefit obligation resulting from employee service in the current period
• Past service cost


  Change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment
• Gain or loss on settlement


  Difference between the present value of the defined benefit obligation and the settlement price
• Interest cost on the defined benefit obligation


  Increase during a period in the present value of a defined benefit obligation which arises because the benefits are one period closer to settlement
• Actuarial gains and losses

  Changes in the present value of the defined benefit obligation resulting from experience adjustments and the effects of changes in actuarial assumptions
• Actuarial assumptions


  • An entity's best estimates of the variables that will determine the ultimate cost of providing post-employment benefits, including demographic assumptions and financial assumptions
• Discount rate


  The rate used to discount post-employment benefit obligations, determined by reference to market yields on high quality corporate bonds or government bonds
• Other long-term employee benefits

  • Employee benefits (other than post-employment benefits and termination benefits) that are due to be settled beyond 12 months after the end of the period in which the employees render the related service. They are accounted for using the procedures applicable for a defined benefit plan, with all components of the net benefit cost recognized in profit or loss
• Termination benefits


  • Employee benefits provided in exchange for the termination of an employee's employment as a result of either an entity's decision or an employee's decision to accept an offer
• Measurement of termination benefits

  If payable within 12 months, account for similarly to short-term employee benefits

  If payable beyond 12 months, account for similarly to other long-term benefits

  If in substance enhancement to post-employment benefits, account for as post-employment benefits