CA Final · Financial Reporting · Ind AS 19 Employee Benefits
Meridian Steel Ltd offered a one-time long-service award, changing its leave policy during the year. Its bonus scheme originally was non-accumulating. From 1 April, the policy changed so that unused entitlement carries forward and can be used or cashed in later years. Which treatment is correct under Ind AS 19?
Meridian must reassess whether the benefit still qualifies as a short-term employee benefit. Ind AS 19 requires this consideration when characteristics change, for example from non-accumulating to accumulating, rather than keeping the original classification fixed or reclassifying automatically.
- ANo further consideration is needed because the original classification is fixed at inception
- BManagement must consider whether the benefit still meets the definition of short-term employee benefits, as its characteristics changed from non-accumulating to accumulatingCorrect
- CAutomatically reclassify it as a defined contribution plan
- DReclassify only if the change in expected timing is temporary
Explanation
Ind AS 19 says that if the characteristics of the benefit change, such as a change from a non-accumulating benefit to an accumulating one, the entity considers whether the benefit still meets the definition of short-term employee benefits. Reclassification is not automatic but requires reassessment. Option D reverses the rule about temporary timing changes.
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