IAS 19

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AnthonyP
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Joined: 13 Jan 2022, 20:34

IAS 19

Post by AnthonyP »

Hello all, this is my first post :)

I was reading the section on Pension accounting, particulary the following:

Short-term employee benefits
Definition of short-term employee benefits
Short-term employee benefits are benefits expected to be settled within 12 months after the end of the year when the service was rendered. They include (IAS 19.9):

wages, salaries, bonuses (incl. profit sharing) and social security contributions,
paid absences,
free or subsidised non-monetary benefits (e.g. medical care, housing).

Question: Would it be necessary to specify in this section that a short-term employee benefit is classified as such only when benefits are expected to be wholly settled within 12 months? This may be relevant given that a bonus (although unlikely) may be paid in 3 separate installments over 3 years for example, which would cause the transaction to no longer be considered a short-term employee benefit.

Regards,

Anthony
JRSB
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Re: IAS 19

Post by JRSB »

Hi, what are you looking to do - account for a bonus settled over 3 years?
pub_acco
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Re: IAS 19

Post by pub_acco »

I think the word "wholly" makes sense here. IAS 19 generally requires complex calculations to reflect uncertainty and time value of money, while it allows simplified approaches for common easy cases, which are short term benefits. It sounds reasonable to set a strict hurdle to apply such an exemption.
AnthonyP
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Joined: 13 Jan 2022, 20:34

Re: IAS 19

Post by AnthonyP »

JRSB wrote: 14 Jan 2022, 10:36 Hi, what are you looking to do - account for a bonus settled over 3 years?
Hi,

I am not working on a transaction per se, I was just trying to provide an example to illustrate my comment :)

In the standard we have the following:

Short-term employee benefits

9 Short-term employee benefits include items such as the following, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services:

(a) wages, salaries and social security contributions;
(b) paid annual leave and paid sick leave;
(c) profit-sharing and bonuses; and
(d) non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees.

The use of the word "wholly" precludes the ability to separate the "three installments" into separate transactions from what I gather, which would mean that the entirety of the transaction is now considered long-term as opposed to have having up to two of the installments considered to be short-term.
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Marek Muc
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Re: IAS 19

Post by Marek Muc »

I agree with pub_acco
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