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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Ganga Engineering Ltd offers an employee a long-term incentive that vests after five years of service. The present value of the obligation at the start of the year was Rs 20 lakh, and at the end of the year it is Rs 27 lakh. Current service cost for the year was Rs 4 lakh, net interest was Rs 1.6 lakh, and the rest of the increase arose from changes in actuarial assumptions. No benefits were paid and there are no plan assets. What is the total amount recognised in profit or loss for the year under Ind AS 19?

The amount recognised in profit or loss is Rs 7.0 lakh. Service cost of Rs 4 lakh, net interest of Rs 1.6 lakh and remeasurements of Rs 1.4 lakh all go to profit or loss, because Ind AS 19 does not recognise remeasurements of other long-term benefits in other comprehensive income.

  1. ARs 5.6 lakh
  2. BRs 7.0 lakhCorrect
  3. CRs 4.0 lakh
  4. DRs 1.4 lakh

Explanation

The increase in obligation is 27 - 20 = Rs 7 lakh. Service cost 4 plus interest 1.6 equals 5.6, so assumption changes are 7 - 5.6 = Rs 1.4 lakh. For other long-term benefits, remeasurements are also recognised in profit or loss, not OCI, so the total is 4 + 1.6 + 1.4 = Rs 7.0 lakh. Option A excludes remeasurements, treating it like a post-employment plan.

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