About
IAS 19 prescribes the accounting for all types of employee benefits except share-based payment, to which IFRS 2 applies. Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment. IAS 19 requires an entity to recognise:
- a liability when an employee has provided service in exchange for employee benefits to be paid in the future; and
- an expense when the entity consumes the economic benefit arising from the service provided by an employee in exchange for employee benefits.
What you should know
- Understand and apply the accounting terminology related to employee benefits in practical situations.
- Define and discuss the different categories of employee benefits.
- Apply the recognition and measurement principles and account for the different categories of employee benefits (with the main focus on short-term employee benefits).
- Understand the difference between defined contribution plans and defined benefit plans.
- Present and disclose employee benefits in the annual financial statements of an entity.
- Outline the principles applied in accounting for employee benefits.
- Discuss the scope and purpose of IAS 19.
- Discuss the definition of employee benefits.
- Prepare journal entries to account for short-term liabilities for employee benefits, such as wages and salaries, sick leave and annual leave.
- Compare defined benefit and defined contribution post-employment benefit plans.
- Prepare entries to account for expenses, assets and liabilities arising from defined contribution post-employment plans.
- Prepare entries to record expenses, assets and liabilities arising from defined benefit post-employment plans.
- Explain how to measure and record other long-term liabilities for employee benefits, such as long service leave.
- Explain when a liability should be recognised for termination benefits and how it should be measured.