Details about IAS 19 Employee Benefits
IAS 19 Employee Benefits explains the accounting needs for employee benefits, like Short Term Employee Benefits (for example, annual leave, salaries, and wages), post-employment benefits like retirement benefits, plus other long-term benefits (for example, long service leave) and lastly termination benefits. The standard sets the theory that the expense of giving employee benefits should be known in the time in which the advantage is gained by the employee, in place of when it is payable or paid, and shows how each type of employee benefits are evaluated, giving thorough guidance, especially about post-employment benefits.
1. Short-term Employee Benefits
This type of employee benefits consist of all the below-mentioned items -
· Bonuses and profit-sharing
· Paid sick leave and paid annual leave
· Social security contributions and salaries and wages
· Non-financial benefits (like subsidized or free goods, cars, housing, or medical care for existing employees)
2. Post-Employment Benefits
This type of employee benefits consists of items like post-employment medical care, post-employment life insurance, retirement benefits, and various pensions. Basically, there are two types of post-employment benefits -
· Defined contribution plans
· Defined benefit plans
It is very important to understand the common differences among both the benefits and to categorize your post-employment benefit properly because accounting treatment is completely dissimilar for both.
· Defined Contribution Plans
These plans under Ias 19 are post-employment benefit plans in which a unit pays a fixed amount to a separate fund. Plus it won’t have any constructive or legal obligation to pay more contributions in case an entity doesn’t have enough assets to pay all employee benefits associating to employee service in the earlier and present periods.
· Defined Benefit Plans
These plans are usually different from defined contribution plans. Under this type of plan, the employer has the responsibility to pay a particular amount of benefits as per the plan to the employee as well as all actuarial risk and risks thus fall on the person.
3. Termination benefits
These are employee benefits given in exchange for the ending of an employee’s employment. A person identifies an expense and liability for termination benefits at the beginning of the following dates -
· When the person identifies expenses reform that in under the scope of Ias 19 Employee Benefits and involves the reimbursement of termination benefits.
· When the person can no longer enjoy those benefit offers and
· When the person identifies expenses for a reforming that is under the scope of Ias 37 plus involves the reimbursement of termination benefits.
4. Other long-term benefits
IAS 19 recommends a tailored appliance of the post-employment benefit-model explained above for other long-term Employee Benefit Plan: the measurement and acknowledgment of a deficit or an extra or in other long-term employee benefit are constant with the necessities mentioned above remeasurements, net interest and service cost are all identified in loss or profit. For example, when compared to bookkeeping for defined benefit plans, the consequences of remeasurements aren’t identified in other inclusive income.