Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 13

EMPLOYEE BENEFITS (IAS 19)

SCOPE

This Standard sets out the accounting and disclosure by employers for employee benefits. The Standard identifies four main categories of employee benefit:

1. Short-term employee benefits, such as wages, salaries, vocational holiday benefit, sick pay, profit sharing, or bonus plans paid within 12 months of the end of the period, and nonmonetary benefits, such as medical care and so on, for current employees.

2. Postemployment benefits, such as pensions, postemployment medical benefits, and postemployment life insurance.

3. Termination benefits, such as severance pay.

4. Other long-term employee benefits including long service leave or sabbatical leave.

Postemployment benefits are categorized as either defined contribution plans or defined benefit plans.

The distinction between short-term and long-term employee benefits is that short-term employee benefits are those that are due to be settled within 12 months of the end of the period in which the employee renders the related service. The Standard achieves this by using in IAS 19 the term “due to be settled” in the definition of short-term employee benefits rather than the term “fall due” and by using the term “are not due to be settled” in the definition of other long-term employee benefits rather than the term “do not fall due.”

CASE STUDY 1

The salaried employees of A are entitled to 25 days paid leave each year. The entitlement accrues evenly over the year and unused leave may be carried ...