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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Tulsi Foods Ltd recognises a short-term employee benefit in the form of paid annual bonus, and also has a plan under which the nature of its paid leave is changed from non-accumulating to accumulating. Under Ind AS 19, what should management do after this change in the benefit's characteristics?

Management must consider whether the leave still meets the definition of a short-term employee benefit. Ind AS 19 says a change in characteristics, such as non-accumulating becoming accumulating, triggers this reassessment rather than automatic reclassification or continued unquestioned treatment as short-term.

  1. AContinue treating the leave as short-term without any assessment
  2. BConsider whether the benefit still meets the definition of short-term employee benefitsCorrect
  3. CTreat the leave as a defined contribution plan
  4. DTreat the leave as a post-employment benefit automatically

Explanation

Ind AS 19 states that if the characteristics of a benefit change, such as from non-accumulating to accumulating, the entity considers whether the benefit still meets the definition of short-term employee benefits. No automatic reclassification occurs, and no classification as a plan type follows. Ignoring the change is wrong.

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