Week 7-Employee Benefit.docx - Week 7 Employee Benefits Chapter 12 Questions 8 13 16 Long Service Leave Problems 3 4 Share-based Payments Problems 8(a 9

Week 7-Employee Benefit.docx - Week 7 Employee Benefits...

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Week 7: Employee Benefits Chapter 12 Questions: 8, 13, 16 Long Service Leave Problems: 3, 4 Share-based Payments Problems 8(a), 9, 10 8 (a) What is long-service leave? Present value measurement basis – the discounted amount that will ultimately be paid to settle the liability is used to measure long-term employee benefits Early periods of employment (usually up to five or seven years) provide no long-service entitlement. If employment ceases during this period, the employee receives nothing . During the next period (five or three years depending on the length of the pre-conditional period), long-service leave accumulates from the beginning of employment. While employees cannot take leave during this period, if they resign they are usually entitled to a cash payment. When the second period has expired, the employee continues to accumulate long-service leave and is eligible to take accumulated leave entitlements . On resignation or retirement, there is usually an entitlement to a cash payment for any accumulated leave. (b) Distinguish between the preconditional, the conditional and the unconditional periods for long-service leave schemes. (L06) pre-conditional period: early years of employment employee has no entitlement to long-service leave if retires no entitlements to long-service leave conditional period long-service leave entitlements start accruing from the beginning of the pre- conditional period paid in cash when retire during this period. Unconditional period long-service leave continues to Accum and employee may take the accumulated leave or the equivalent cash on retirement. 13 What is the general approach to accounting for equity-settled share-based payments, such as granting share options to employees, that is adopted in AASB 2? (L09) Have three periods, in pre-conditional period once ceased, employee has no entitlement In conditional period, entitlement vests, paid out if employment ceases In unconditional period, entitled to take long-service lease, if not taken, leave is paid out on termination at the rate of wage or salary at the time it is taken or is paid out on termination. Recognition: give rise of Dr remuneration expn because assumed the service are consumed immediately, and the corresponding increase in equity account named Cr Employee options
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Measurement: measure at fair value, recognised at the time received or acquired.
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