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CMA Intermediate · Corporate Accounting and Auditing · Employee Benefits (Ind AS 19)

Under Ind AS 19, which of the following is a necessary step in measuring the present value of a defined benefit obligation and the related current service cost?

Measuring a defined benefit obligation and current service cost requires three things: an actuarial valuation method, attribution of benefit to periods of service, and actuarial assumptions. Contribution-based expensing and undiscounted measurement belong to other treatments and do not satisfy Ind AS 19.

  1. AApplying an actuarial valuation method, attributing benefit to periods of service and making actuarial assumptionsCorrect
  2. BRecording contributions paid to the fund as an expense when they fall due
  3. CMeasuring the obligation on an undiscounted basis at the amount expected to be paid
  4. DTreating the plan as a defined contribution plan if the entity pays regular contributions

Explanation

Paragraph 66 states that to measure the present value of post-employment benefit obligations and current service cost, it is necessary to apply an actuarial valuation method, attribute benefit to periods of service and make actuarial assumptions. The undiscounted option is wrong because defined benefit obligations are measured on a discounted basis.

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