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IAS 19 prescribes the accounting treatment of short-term employee benefits, post employment benefits, other long-term employee benefits and termination benefits.
- Short term benefits owing to an employee at the period end should be accrued.
- Defined contribution pension scheme contributions should be recognised in profit or loss.
- The present value of defined benefit pension scheme obligations less the fair value of scheme assets should be shown in the statement of financial position. The movement in the value of the scheme is split into its constituent parts and each accounted for separately. Remeasurements including actuarial gains and losses are recognised as other comprehensive income.
- Other long-term benefits are dealt with in a similar, albeit simpler, way to pension schemes.
- Termination benefits are accrued where an entity is demonstrably committed to both the termination and the provision of termination benefits.
ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach
ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach was issued in March 2021. It includes draft guidance to be used by the Board when developing new disclosure requirements. IAS 19 is one of two Standards being used to test the guidance and as such the ED also includes proposed amendments to IAS 19. The proposals include:
- An overall disclosure objective that requires an entity to disclose information allowing users to assess the effect of each type of employee benefit on financial position, financial performance and cash flows;
- Information to allow users to evaluate the risks and uncertainties associated with defined benefit plans;
- Specific information about defined benefit plan, including components of amounts in the primary financial statements relating to this type of plan and significant actuarial assumptions.
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Related IFRIC interpretations
IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
Provides general guidance on how to assess the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. Explains how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement.
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