Section 7100: Employee Benefits
International Accounting Standard 19
Employee Benefits
1. First Version of IAS 19
"Employee Benefits" issued in February 1998
2. Amendments
Amended in May 2002
Amended in December 2004
[U.S. GAAP Codification Topic]
710 Compensation - general
712 Compensation - nonretirement postemployment benefits
715 Compensation - retirement benefits
[U.S. GAAP before the Codification]
SFAS 43, November 1980, Accounting for Compensated Assets
SFAS 112, November 1992, Employers' Accounting for Postemployment Benefits, an amendment of FASB Statements No. 5 and 43
SFAS 87, December 1985, Employers' Accounting for Pensions
SFAS 88, December 1985, Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits
SFAS 106, December 1990, Employers' Accounting for Postretirement Benefits Other Than Pensions
SFAS 132, February 1998, Employers' Disclosures about Pensions and Other Postretirement Benefits
SFAS 132(R), December 2003, Employers' Disclosures about Pensions and Other Postretirement Benefits
SFAS 158, December 2006, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)
3. Employee Benefits
(1) Short-term Employee Benefits
(2) Post-employment Benefits
(3) Other Long-term Employee Benefits
(4) Termination Benefits
4. Short-term Employee Benefits include:
(1) salaries, wages, social security contributions
(2) short-term compensated absences: paid annual leave, paid sick leave
(3) profit-sharing and bonuses: payable within 12 months
(4) non-monetary benefits for current employees: housing, cars, medical care
5. Short-term Employee Benefits
Recognise (1) during the period employee provided service
(1) undiscounted amount expected to be paid
6. Other Long-term Employee Benefits include:
(1) long-term compensated absences: long-term sick leave, sabbatical leave
(2) jubilee or other long-service benefits
(3) long-term disability benefits
(4) profit-sharing or bonuses: payable after 12 months
(5) deferred compensation: paid after 12 months
7. Other Long-term Employee Benefits: Recognition of Liability
Amount of liability = (1) - (2)
(1) present value of defined benefit obligation
(2) fair value of plan assets
8. Other Long-term Employee Benefits: Recognition of Expense
Amount of expense = Net Total of the following:
(1) current service cost
(2) interest cost
(3) expected return on plan assets
(4) actuarial gains and losses
(5) past service cost
(6) effect of curtailments and settlements
9. Termination benefits are recognised as a liability and an expense
--> when, and only when
the entity is committed to either (a) or (b)
(a) terminate employment before normal retirement date
(b) provide termination benefits for voluntary early retirement
10. If termination benefits are due more than 12 months after the reporting period
--> use present value
If an offer is made to encourage voluntary redundancy
-->termination benefits are based on
expected number of employees to accept the offer
11. Post-employment Benefits are
--> employee benefits payable
after the completion of employment
other than termination benefits
12. Post-employment Benefits include:
(1) pensions
(2) post-employment life insurance
(3) post-employment medical care
13. Post-employment Benefit Plans
(1) Defined contribution plans
--> Entity's obligation is limited to the amount the entity agreed to contribute to the fund
(2) Defined benefit plans
--> Entity's obligation is to provide the agreed benefits to employees
14. Multi-employer Plan satisfies the following: IAS 19.7
(1) pool the assets contributed by entities, not under common control
(2) provide benefits to employees of more than one entity
--> benefits are not affected by the identity of employers
(3) not a state plan
15. Multi-employer Plan: Classification, IAS 19.29
Multi-employer plan is classified either as (a) or (b), based on the terms of the plan
(a) a defined benefit plan
(b) a defined contribution plan
16. Defined "Contribution" Multi-employer Plan
Accounting is same as the accounting for other defined contribution plans
--> for entity's proportionate share of obligations and assets
17. Defined "Benefit" Multi-employer Plan, IAS 19.29
Accounting is same as the accounting for other defined benefit plans
--> for entity's proportionate share of obligations and assets
18. If sufficient information is not available to use defined benefit accounting
--> treat it a as a defined contribution plan, IAS 19.30
19. Group Administration Plan is an aggregation of single employer plans
--> Claims of different employers are segregated
for the benefits of "their own" employees, IAS 19.33
20. Multiemployer Plan: U.S. GAAP, SFAS 87.67, ASC 715-80-05-1
Two or more unrelated employers contribute to a pension plan
Assets contributed by one employer may be used to benefit employees of other employers
21. Multiple-Employer Plan: U.S. GAAP, SFAS 87.71, ASC 715-30-35-70
Aggregations of single-employer plans
--> combined to pool assets for investment
22. State Plans, IAS 19.37
Established by legislation
Operated by government or other body, not subject to control by reporting entity
23. Accounting for State Plans is
--> same as the accounting for multi-employer plans, IAS 19.36
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