Skip to content

CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Kaveri Foods Ltd has a paid sick-leave benefit that employees can use only within the same year it is earned and cannot carry forward. Management expects all such benefits to be settled within twelve months after the reporting period in which service is rendered. In the current year, a temporary shutdown delays the expected settlement of some benefits beyond the usual timing, but management expects normal timing to resume next year. What is the correct treatment under Ind AS 19?

Kaveri Foods should continue to treat the benefit as a short-term employee benefit. Ind AS 19 says reclassification is not needed when expectations of settlement timing change only temporarily. It is considered only if the benefit's characteristics change or the timing change is not temporary.

  1. AReclassify the benefit as an other long-term employee benefit immediately
  2. BReclassify the benefit as a post-employment benefit
  3. CContinue to treat it as a short-term employee benefit, since the change in expected timing is only temporaryCorrect
  4. DDerecognise the liability until settlement timing becomes certain

Explanation

An entity need not reclassify a short-term employee benefit if its expectations of the timing of settlement change temporarily. Reclassification is considered only if the benefit's characteristics change or the change in expectation is not temporary. Here the delay is temporary, so option A is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 19 Employee Benefits shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 19 Employee BenefitsFree diagnostic mock

More Ind AS 19 Employee Benefits questions