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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Ravi, the accountant of Himalaya Foods Ltd, notes that the company's new scheme provides a bonus to employees payable after five years of continued service. He asks which statement about the measurement of this benefit under Ind AS 19 is correct.

A simplified method applies to the five-year bonus. Ind AS 19 reasons that measuring other long-term employee benefits is not usually subject to the same degree of uncertainty as post-employment benefits, so remeasurements are not taken to other comprehensive income under this method.

  1. AIt is measured with the same degree of uncertainty, so remeasurements go to OCI
  2. BA simplified method applies because measurement of other long-term benefits is not usually subject to the same uncertainty as post-employment benefitsCorrect
  3. CIt is measured only when paid, since it is not a post-employment benefit
  4. DIt is accounted for exactly as a defined contribution plan

Explanation

Ind AS 19 observes that measurement of other long-term employee benefits is not usually subject to the same degree of uncertainty as post-employment benefits, so it requires a simplified method. That method does not recognise remeasurements in OCI. Option A wrongly assumes equal uncertainty and OCI treatment.

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