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PAS 19 - EMPLOYEE BENEFITS(pas 19 MODULEOBJECTIVES Identify...

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EMPLOYEE BENEFITS (pas 19)
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MODULE OBJECTIVES Identify employee benefits recognized for accounting purposes Distinguish between defined contribution plans and defined benefits plans Measure and recognize employee benefits under both defined contribution plans and defined benefits plans Identify required disclosures relating to employee benefits
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SCOPE Applied in accounting for all employee benefits, except share based payment transactions Does not deal with reporting by employee benefit plans (PAS 26)
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EMPLOYEE BENEFITS DEFINED All forms of consideration given by an entity in exchange for service rendered by employees Wages, salaries and SSS contributions Paid sick leave, vacation leave, etc. Profit sharing and bonuses Subsidized goods or services Non-monetary benefits Pensions and retirement pays
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FOUR MAIN CATEGORIES OF  EMPLOYEE BENEFITS Short-term employee benefits Salaries and wages, holiday pay, sick pay, profit sharing, bonus plans and non-monetary benefits Post-employment benefits Pensions, post-employment medical benefits, post- employment life insurance Termination benefits Severance pay Other long-term employee benefits Long service leave, sabbatical leave
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RECOGNITION AND MEASUREMENT SHORT TERM BENEFITS The enterprise shall recognize the undiscounted amount of short-term employee benefits during the period when the employee renders the service. As an expense or As a cost of an asset when another standard requires its cost to be included in the cost of that asset.
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RECOGNITION AND MEASUREMENT-  COMPENSATED ABSENCES Accumulating compensated absences are recognized when the employees render service that increases their entitlement to future compensated absences. Non-accumulating compensated absences are recognized when the absences occur.
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COMPENSATED ABSENCES ACCUMULATING BENEFITS Recognize as liability the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date. NON-ACCUMULATING BENEFITS No liability is recognized at balance sheet date.
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Illustrative Example Bali Company compensates its employees for certain absences for vacation and sickness. Employees are entitled to one day vacation plus one day sick leave for each month worked during the year. Unused vacation days may be carried forward, but unused sick leave does not accumulate. Employees are compensated according to their pay in effect at the time of the leave.
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Date of Unused Vacation Sick leave Initial Vacation taken in taken in Rate Employee Employment 1/1/07 2007 2007 per day A. B. Santos 01/06/05 0 7 5 P 450 C. D. Garcia 06/28/06 6 3 10 420 E. F. Cruz 11/01/07 0 0 5 400 G. H. Buen 08/01/07 0 1 2 380 The following data were taken from the records for the year 2007.
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REQUIRED: Compute the beginning balance of the account Liability for Compensated Absences at December 31, 2006.
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