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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Narmada Engineering Ltd has an accumulating compensated absence scheme and a bonus scheme. Which of the following changes would require the entity to consider whether a benefit still meets the definition of short-term employee benefits under Ind AS 19?

A change from a non-accumulating to an accumulating benefit changes the benefit's characteristics, so the entity must consider whether it still qualifies as a short-term employee benefit under paragraph 10. A merely temporary change in expected settlement timing does not by itself require reclassification.

  1. AA one-year temporary delay in settling the benefit because of a cash shortage, expected to reverse next year
  2. BA change from a non-accumulating benefit to an accumulating benefit, which alters the characteristics of the benefitCorrect
  3. CA small change in the number of employees eligible for the benefit
  4. DA change in the entity's reporting date by one month

Explanation

Paragraph 10 says reclassification is considered when the characteristics of the benefit change, such as from non-accumulating to accumulating, or when a change in settlement timing is not temporary. A temporary delay does not require reclassification, so the first option is wrong. Headcount or reporting date changes are not named triggers.

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