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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Narmada Steels Ltd is changing the terms of its leave benefit. Previously, unused leave lapsed each year. From the next period, unused leave will carry forward and can be used or encashed in later periods. Which statement best reflects the Ind AS 19 requirement?

The entity must consider whether the leave benefit still qualifies as a short-term employee benefit. Ind AS 19 says that when characteristics change, for example from non-accumulating to accumulating, the entity reassesses the definition. Automatic retention as short-term or conversion to a plan is not prescribed.

  1. ANo reassessment is required because leave is always a short-term benefit
  2. BThe entity should consider whether the benefit still meets the definition of short-term employee benefits, as the characteristics have changed from non-accumulating to accumulatingCorrect
  3. CThe benefit must automatically be treated as a defined contribution plan
  4. DThe benefit must be measured at fair value through other comprehensive income

Explanation

The standard gives this exact kind of change, from non-accumulating to accumulating, as a change in characteristics. In that case the entity considers whether the benefit still meets the definition of short-term employee benefits. It does not automatically move to a plan category.

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