Employee benefits

Question 1

employee benefits

Answer 1

all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment

Question 2

categories employee benefits

Answer 2

• short-term employee benefits (payable within 12 months)
• post-employment benefits (payable after completion of employment)
• other long-term employee benefits (not payable within 12 months after rendering services)
• termination benefits

Question 3

post-employment benefits

Answer 3

formal or informal arrangements under which an entity provides post-employment benefits for one or more employees (retirement benefits, life insurance etc.)

Question 4

Defined contribution plans

Answer 4

entity pays a fixed contribution into a separate entity => risk falls upon the employee

Question 5

Defined benefit plans

Answer 5

employer obliged to provide agreed level of post-employment benefits
=> risk falls upon the employer

Question 6

actuarial risk

Answer 6

risk of cost of providing benefits (assurance)

Question 7

investment risk

Answer 7

risk that assets will be insufficient to pay required benefits

Question 8

accounting for defined contribution post-employment plans

Answer 8

• if payment > expense then asset
• if payment < expense then liability

Question 9

amounts to be recognized in profit/loss

Answer 9

• current service cost
• past service cost
• net interest

Question 10

amounts to be recognized in other comprehensive income

Answer 10

• actuarial gains and losses
• excess return on plan assets

Question 11

how should we account for short-term employee benefits

Answer 11

should be expensed when incurred. Liability may arise when benefits are accumulating across account periods

Question 12

accumulating and vesting

Answer 12

liability recorded at each reporting date

Question 13

accumulating but non-vesting

Answer 13

liability only recognized for the portion that is expected to result in additional payment to employees