Week 4_Provisions - Issues in Corporate Financial Reporting...

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1 Issues in Corporate Financial Reporting and Analysis (ACCT3563/3573 Analysis (ACCT3563/3573) Accounting for Provisions Required readings Deegan Chapter 10, Sections 10 2 and 10 4 10.2 and 10.4 Deegan Chapter 13 Picker et al Chapter 4 AASB 119 3/26/2009 3:32:42 PM 2 ACCT3563/3573 IFRA AASB 137
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2 Accounting for employee benefits Learning Objectives (1) salaries and wages profit sharing and bonuses non-monetary benefits annual leave, sick leave 3/26/2009 3:32:42 PM 3 ACCT3563/3573 IFRA long service leave 3/26/2009 Provisions generally meaning of provision and Learning Objectives (2) meaning of provision and difference between an accrual or contingent liability recognition and measurement of provisions 3/26/2009 3:32:42 PM 4 ACCT3563/3573 IFRA Relationship to earnings management 3/26/2009
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3 Overview of employee benefits (1) Employee benefits are all forms of consideration given by an entity in exchange for services rendered by employees o Form of benefits: payments ______________________________ o Benefits provided include those made: 3/26/2009 3:32:42 PM 5 ACCT3563/3573 IFRA directly to employees, __________________ ____________________ to others such as insurance companies Overview of employee benefits (2) Employees o common law meaning o may provide services on a full-time, part-time, permanent, casual or temporary basis o Include _____ and other management 3/26/2009 3:32:42 PM 6 ACCT3563/3573 IFRA personnel
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4 Categories of employee benefits (1) Short-term employee benefits (due within _________ of period end) o Wages, salaries, o Short term compensated absences, ie. annual leave and sick leave o Profit sharing and bonuses o Non-monetary benefits such as housing, cars, medical care for current employees 3/26/2009 3:32:42 PM 7 ACCT3563/3573 IFRA Post-employment benefits o pensions and other retirement benefits o post-employment medical care and life insurance Categories of employee benefits (2) Other long-term employee benefits o long service leave o deferred compensation o long-term disability benefits o Profit sharing and bonuses (payable after _______ of period end) 3/26/2009 3:32:42 PM 8 ACCT3563/3573 IFRA Termination benefits o terminate employment before retirement date o voluntary redundancy
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5 Short-term employee benefits Recognition o When an employee has rendered service o Expense unless capitalisation required by another standard o Liability (______________ ) to the extent benefits for services not already paid o Asset (___________ ) to the extent that amount paid exceeds benefits for services 3/26/2009 3:32:42 PM 9 ACCT3563/3573 IFRA Measurement o ______________ amount (the nominal amount) Salaries and wages Recognition and measurement on __________ basis if payable within 12 months of the end of the period _________ arise where the services rendered by the employee but associated entitlements have not been paid as at the reporting date Exceptions to immediate expense recognition 3/26/2009 3:32:42 PM 10 ACCT3563/3573 IFRA o a manufacturer - include in cost of ___________ o installation of plant - include in cost of ________
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6 Annual Leave (1) In Australia employees are typically granted four weeks’ annual leave per ea year o Accumulating compensated absence - carries forward o ________ - entitled to cash payment
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Week 4_Provisions - Issues in Corporate Financial Reporting...

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