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IAS 19 Employee Benefits Summary
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Employee benefits summarized to easily understand.
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Financial Accounting (FAC3764)SUMMARY of Learning Unit 7
STANDARDS:
- IFRS 7 , 9 & IAS 32: Financial Instruments
- IAS 19: Employee Benefits
IAS 19: EMPLOYEE BENEFITS
Employee Benefits are all forms of consideration given by an entity in exchange for service
rendered by employees or for the termination of employment.
Four categories:
Short-term Long-term Post-employment Termination
employee benefits employee benefits benefits benefits
•wages, salaries •long-term paid •retirement benefits •Employee benefits
and social security absences •other post- provided in
contributions •jubilee employment exchange for the
•paid annual leave •disability benefits benefits (life termination of an
& paid sick leave insurane and employee
•profit-sharing and medical care)
bonuses
•non-monetary
benefits
Short-term Employee Benefits
Expected to be settled wholly before 12 months after the end of the reporting period in which
the employees provided the service.
Short-term benefits are recognised when the employee renders the service. This means that
Debit Credit
Short-term Employee benefit expense xxx
Bank xxx
, Non-monetary items:
Debit Credit
Employee benefit xxx
Bank xxx
Accrual Journal
Step 1: The employee benefit is raised as a liability when incurred:
Debit Credit
Employee benefit expense xxx
Account payable xxx
Recognising short-term employee benefits incurred
Step 2: The employee benefit is paid:
Debit Credit
Account payable xxx
Bank xxx
Payment of short-term employee benefits
Step 3: if the expense was underpaid, there would be a credit balance on the account
payable, but if the expense has been overpaid, there will be a debit balance on the account
payable.
Debit Credit
Employee benefit expense xxx
Account payable xxx
Over-payment of short-term benefits
Employee cost capitalised
Debit Credit
Inventory xxx
Employee benefit expense xxx
A portion of the short-term employee benefit expense relating to inventory
manufactured is included in the cost of inventories.
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