FRS 119: EMPLOYEE BENEFITS. Para 7 ~. Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees. OBJECTIVE. To prescribe actg & disclosure for employee Benefits. Specifically for entity to recognise :
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FRS 119: EMPLOYEE BENEFITS
Employee benefits are all forms of
consideration given by an entity in
exchange for service rendered by
To prescribe actg & disclosure for employee
Specifically for entity to recognise:
The employee benefits include those provided under:
(no realistic alternative but to pay the benefits) Eg: Change in informal practices cause unacceptable damage to r/ship with employee
(1)Short-term employee. Fall due within 12mths after end of period Nyee rendered the service.
Para 8 Eg
(b) Short-term compensated absences (paid annual and sick leave, maternity, vacation ~ Para 11),
(c)Profit sharing, bonus pay’ble,
(d)Non-monetary benefits (medical care,housing, subsidised gds/services)
(2)Post-employment benefits. Payable after completn of Nymentsuch as retirement benefits (pensions), post Nyment life insurance and medical care.
(3)Other long-term employee benefits such as long service-leave. Fall due > 12mths after end of period Nyee rendered the service
(4)Termination benefits are result of either:
FRS 119 prescribed diff. req. for each benefit
(a) Straight forward,
(b) NO actuarial assumptions to measure oblig or cost, i.e. no actuarial gain/loss
(c) Oblign x measured on discount basis
Para 11 – 16 :
Short-term compensated absences
Recognise expected cost :
Para 17 -22
Profit Sharing and Bonus Plans
Recognise expected costs of ~ only when:
Para 18: Some profit-sharing plans, employees receive a share of profit if remain for specified period, giving rise to constructive obligatn
Eg : A profit sharing plan requires entity to pay specified proportn of its profit for the yr to Nyees who serve throughout the yr. Assume, if NO Nyees leave during the yr, total profit sharing payments will be 3% of profit. Entity estimates staff turnover reduce the payments to 2.5% of profit.
To recognise liability and expense of 2.5% of profit
Para 23 ~ Disclosure of Short Term Benefits
FRS 119 x require specific disclosure, but others such as FRS 124 may require disclosure of Nyee benefits of key mgt personnel
Where the two are differentiated by economic
substance of the plans based on its terms & cond.
Defined Contribution Plans
Para 25 ~
Entity obligatn NOT ltd to amt contribute... WHEN
legal & constructive oblig exist.
Eg. History of former Nyee benefits to a/c for inflatn
Dr. Retirement expense or staff cost xxx
Cr. Cash/Accrued liabilityxxx
(i) OBLIGATED to provide agreed benefits to current and former Nyees
(ii)Actuarial risk (Benefits cost > than expected) and Investment risk BORNE BY THE ENTITY
(i) Evaluate nature of its defined benefit plans and
(ii) Finl effect of changes in plans during the period