IND AS 19 – Employee Benefits
The Indian Accounting Standard (Ind AS) 19 aims to prescribe accounting and
disclosure for employee benefits. It requires recognition of the liability by an entity
when an employee provides services for employee benefits to be paid in the future,
and recognition of expenses when the entity utilises the economic benefit arising
from service given by an employee in exchange for employee benefits.
Objective:
The objective of this Standard is to prescribe the accounting and disclosure for
employee benefits. The Standard 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
service provided by an employee in exchange for employee benefits.
What are the different employee benefits under AS 19?
I. Short-term employee benefits –
There are those which are expected to be fully paid before 12 months after
the end of the accounting period in which the employee rendered service.
Examples include salaries, paid annual leave, rental accommodation, car
benefit etc. They are accounted on a undiscounted basis because the
settlement is expected to happen within the short term. Short Term
Employee Benefits are recognised as:
A liability after deducting the amount paid within the year.
, As an asset, if the amount paid exceeds the undiscounted amount of the
benefits payable.
As an expense in the profit and loss
Illustration:
Consider an employee with salary of 10,000 Rs per month and 1 month
bonus payable every year. If at the end of the year, 2 months salary along
with bonus are unpaid, then these are recognised as a liability. However if 2
months extra salary has been paid to the employee, then it is treated as an
asset.
For Short term employee benefits, no specific disclosures are required under
Ind AS 19.
II. Post Employment benefits
These are those employee benefits which are paid after the completion of
employment.
Post-employment benefit plans are classified as either defined contribution
plans or defined benefit plans, depending on the economic substance of the
plan as derived from its principal terms and conditions.
Post-employment benefits:
a. Defined Contribution Plans: They are recognised as:
A liability after deducting the amount paid within the year.
As an asset, if excess amount has been contributed.
As an expense in the profit and loss
The Indian Accounting Standard (Ind AS) 19 aims to prescribe accounting and
disclosure for employee benefits. It requires recognition of the liability by an entity
when an employee provides services for employee benefits to be paid in the future,
and recognition of expenses when the entity utilises the economic benefit arising
from service given by an employee in exchange for employee benefits.
Objective:
The objective of this Standard is to prescribe the accounting and disclosure for
employee benefits. The Standard 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
service provided by an employee in exchange for employee benefits.
What are the different employee benefits under AS 19?
I. Short-term employee benefits –
There are those which are expected to be fully paid before 12 months after
the end of the accounting period in which the employee rendered service.
Examples include salaries, paid annual leave, rental accommodation, car
benefit etc. They are accounted on a undiscounted basis because the
settlement is expected to happen within the short term. Short Term
Employee Benefits are recognised as:
A liability after deducting the amount paid within the year.
, As an asset, if the amount paid exceeds the undiscounted amount of the
benefits payable.
As an expense in the profit and loss
Illustration:
Consider an employee with salary of 10,000 Rs per month and 1 month
bonus payable every year. If at the end of the year, 2 months salary along
with bonus are unpaid, then these are recognised as a liability. However if 2
months extra salary has been paid to the employee, then it is treated as an
asset.
For Short term employee benefits, no specific disclosures are required under
Ind AS 19.
II. Post Employment benefits
These are those employee benefits which are paid after the completion of
employment.
Post-employment benefit plans are classified as either defined contribution
plans or defined benefit plans, depending on the economic substance of the
plan as derived from its principal terms and conditions.
Post-employment benefits:
a. Defined Contribution Plans: They are recognised as:
A liability after deducting the amount paid within the year.
As an asset, if excess amount has been contributed.
As an expense in the profit and loss
