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CMA Intermediate · Corporate Accounting and Auditing · Employee Benefits (Ind AS 19)

Bharat Forgings Ltd recognises termination benefits in the year ended 31 March 2027 under a restructuring plan. Part of the benefits will be paid in March 2029, so they are not expected to be settled wholly before twelve months after the reporting period. Separately, a second scheme only increases the pension payable to the employees who retire. Which treatment is correct for the two schemes?

The restructuring termination benefits follow other long-term benefit requirements because they are not expected to be settled wholly within twelve months after the reporting period. The scheme that only enhances pension is an enhancement of post-employment benefits, so post-employment requirements apply to it.

  1. ABoth schemes follow short-term employee benefit requirements
  2. BFirst scheme follows other long-term benefit requirements; the pension enhancement follows post-employment benefit requirementsCorrect
  3. CFirst scheme follows post-employment requirements; the pension enhancement follows other long-term requirements
  4. DBoth schemes follow other long-term employee benefit requirements

Explanation

Termination benefits that are an enhancement to post-employment benefits follow post-employment requirements. Others not expected to be settled wholly within twelve months after the reporting period follow other long-term benefit requirements. So the restructuring benefits are other long-term and the pension increase is post-employment.

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