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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Ganga Steels Ltd has two benefits. (A) A leave encashment plan payable after retirement, a post-employment defined benefit, with an actuarial loss of Rs 6 lakh this year. (B) A jubilee benefit payable on completing 20 years, an other long-term benefit, with an actuarial loss of Rs 2 lakh this year. Ignoring all other items and tax, what is the correct treatment under Ind AS 19?

Rs 6 lakh on the post-employment plan is recognised in other comprehensive income, while Rs 2 lakh on the jubilee benefit is recognised in profit or loss. Ind AS 19 applies a simplified method to other long-term benefits, which does not recognise remeasurements in OCI, unlike post-employment benefits.

  1. ARs 8 lakh in profit or loss, as both are remeasurements of obligations
  2. BRs 6 lakh in other comprehensive income and Rs 2 lakh in profit or lossCorrect
  3. CRs 8 lakh in other comprehensive income, as both are defined benefit obligations
  4. DRs 2 lakh in other comprehensive income and Rs 6 lakh in profit or loss

Explanation

Post-employment defined benefit remeasurements (A) go to OCI, so Rs 6 lakh is in OCI. For other long-term benefits (B), the simplified method does not recognise remeasurements in OCI, so Rs 2 lakh goes to profit or loss. Total loss of Rs 8 lakh is thus split 6 lakh OCI and 2 lakh P&L; the options putting all in one place ignore this distinction.

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