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

Dhanvi Textiles Ltd provides free subsidised meals to the spouse and children of its employees and pays the cost directly to a catering contractor. How should this be viewed under Ind AS 19?

The arrangement falls within Ind AS 19. Employee benefits include those given to dependants such as spouses and children, and they may be settled by goods, services or payments made to others. Payment to a catering contractor therefore does not take the benefit outside the standard.

  1. AIt is outside Ind AS 19 because the beneficiaries are not employees
  2. BIt is outside Ind AS 19 because payment goes to a third party, not the employees
  3. CIt is within Ind AS 19 because benefits may be provided to dependants and settled by payments or services to othersCorrect
  4. DIt is within Ind AS 19 only if the meals are settled directly in cash to the employees

Explanation

Ind AS 19 states that employee benefits include benefits provided to employees or their dependants or beneficiaries. They may be settled by payments or the provision of goods or services made directly to employees, spouses, children or other dependants, or to others such as insurance companies. Hence the third-party payment and dependant beneficiaries do not remove it from scope.

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