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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Ganga Steels Ltd is comparing its accounting for a defined benefit gratuity plan (post-employment) with its accounting for a sabbatical benefit (other long-term). Which statement correctly reflects the difference under Ind AS 19?

Gratuity remeasurements are recognised in other comprehensive income, while remeasurements of the sabbatical benefit are not. Ind AS 19 prescribes a simplified method for other long-term employee benefits, which unlike post-employment benefits does not recognise remeasurements in other comprehensive income.

  1. ABoth benefits recognise remeasurements in other comprehensive income
  2. BRemeasurements of the gratuity plan go to other comprehensive income, whereas for the sabbatical benefit they are not recognised in other comprehensive incomeCorrect
  3. CRemeasurements of the sabbatical benefit go to other comprehensive income, whereas for the gratuity plan they go to profit or loss
  4. DNeither benefit has remeasurements, since both use the simplified method

Explanation

Ind AS 19 requires a simplified method for other long-term employee benefits and, unlike post-employment benefits, does not recognise remeasurements in other comprehensive income. Post-employment defined benefit remeasurements are recognised in other comprehensive income. Option A ignores this distinction.

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