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TaxTMI 
Employee Benefits
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....eal with accounting and reporting by employee benefit plans. 3. The employee benefits to which this Standard applies include those provided: (a) under formal plans or other formal agreements between an enterprise and individual employees, groups of employees or their representatives; (b) under legislative requirements, or through industry arrangements, whereby enterprises are required to contribute to state, industry or other multi-employer plans; or (c) by those informal practices that give rise to an obligation. Informal practices give rise to an obligation where the enterprise has no realistic alternative but to pay employee benefits. An example of such an obligation is where a change in the enterprise s informal practices would cause unacceptable damage to its relationship with employees. 4. Employee benefits include: (a) short-term employee benefits, such as wages, salaries and social security contributions (e.g., contribution to an insurance company by an employer to pay for medical care of its employees), paid annual leave, profit-sharing and bonuses (if paya....
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....butions into a separate entity (a fund) and will have no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. 7.6 Defined benefit plans are post-employment benefit plans other than defined contribution plans. 7.7 Multi-employer plans are defined contribution plans (other than state plans) or defined benefit plans (other than state plans) that: (a) pool the assets contributed by various enterprises that are not under common control; and (b) use those assets to provide benefits to employees of more than one enterprise, on the basis that contribution and benefit levels are determined without regard to the identity of the enterprise that employs the employees concerned. 7.8 Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) which do not fall due wholly within twelve months after the end of the period in which the employees render the related service. 7.9 Termination benefits are employee benefits payable as a result of either: &....
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....enefit plan; and (b) are not available to the reporting enterprise s own creditors (even in bankruptcy) and cannot be paid to the reporting enterprise, unless either: (i) the proceeds represent surplus assets that are not needed for the policy to meet all the related employee benefit obligations; or (ii) the proceeds are returned to the reporting enterprise to reimburse it for employee benefits already paid. 7.17 Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm s length transaction. 7.18 The return on plan assets is interest, dividends and other revenue derived from the plan assets, together with realised and unrealised gains or losses on the plan assets, less any costs of administering the plan and less any tax payable by the plan itself. 7.19 Actuarial gains and losses comprise: (a) experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred); and ....
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....r Fixed Assets). Paragraphs 11, 14 and 17 explain how an enterprise should apply this requirement to short-term employee benefits in the form of compensated absences and profit-sharing and bonus plans. Short-term Compensated Absences 11. An enterprise should recognise the expected cost of short-term employee benefits in the form of compensated absences under paragraph 10 as follows: (a) in the case of accumulating compensated absences, when the employees render service that increases their entitlement to future compensated absences; and (b) in the case of non-accumulating compensated absences, when the absences occur. 12. An enterprise may compensate employees for absence for various reasons including vacation, sickness and short-term disability and maternity or paternity. Entitlement to compensated absences falls into two categories: (a) accumulating; and (b) non-accumulating. 13. Accumulating compensated absences are those that are carried forward and can be used in future periods if the current period s entitlement is not used in full. Accumulating compe....
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.... current period s entitlement is not used in full and do not entitle employees to a cash payment for unused entitlement on leaving the enterprise. This is commonly the case for maternity or paternity leave. An enterprise recognises no liability or expense until the time of the absence, because employee service does not increase the amount of the benefit. Provided that a Small and Medium-sized Company, as defined in the Notification, may not comply with paragraphs 11 to 16 of the Standard to the extent they deal with recognition and measurement of short-term accumulating compensated absences which are non-vesting (i.e., short-term accumulating compensated absences in respect of which employees are not entitled to cash payment for unused entitlement on leaving). Profit-sharing and Bonus Plans 17. An enterprise should recognise the expected cost of profit-sharing and bonus payments under paragraph 10 when, and only when: (a) the enterprise has a present obligation to make such payments as a result of past events; and (b) a reliable estimate of the obligation can be made. A present obligation exists when, and only when....
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....ployees render the related service, those payments are other long-term employee benefits (see paragraphs 127-132). Disclosure 23. Although this Statement does not require specific disclosures about short-term employee benefits, other Accounting Standards may require disclosures. For example, where required by AS 18 Related Party Disclosures an enterprise discloses information about employee benefits for key management personnel. Post-employment Benefits: Defined Contribution Plans and Defined Benefit Plans 24. Post-employment benefits include: (a) retirement benefits, e.g., gratuity and pension; and (b) other benefits, e.g., post-employment life insurance and post-employment medical care. Arrangements whereby an enterprise provides post-employment benefits are postemployment benefit plans. An enterprise applies this Statement to all such arrangements whether or not they involve the establishment of a separate entity to receive contributions and to pay benefits. 25. Post-employment benefit plans are classified as either defined contribution plans or defined benefit plans, depending on the economic substance of....
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....its proportionate share of the defined benefit obligation, plan assets and cost associated with the plan in the same way as for any other defined benefit plan; and (b) disclose the information required by paragraph 120. 30. When sufficient information is not available to use defined benefit accounting for a multi-employer plan that is a defined benefit plan, an enterprise should: (a) account for the plan under paragraphs 45-47 as if it were a defined contribution plan; (b) disclose: (i) the fact that the plan is a defined benefit plan; and (ii) the reason why sufficient information is not available to enable the enterprise to account for the plan as a defined benefit plan; and (c) to the extent that a surplus or deficit in the plan may affect the amount of future contributions, disclose in addition: (i) any available information about that surplus or deficit; ....
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....ministration plans. A group administration plan is merely an aggregation of single employer plans combined to allow participating employers to pool their assets for investment purposes and reduce investment management and administration costs, but the claims of different employers are segregated for the sole benefit of their own employees. Group administration plans pose no particular accounting problems because information is readily available to treat them in the same way as any other single employer plan and because such plans do not expose the participating enterprises to actuarial risks associated with the current and former employees of other enterprises. The definitions in this Standard require an enterprise to classify a group administration plan as a defined contribution plan or a defined benefit plan in accordance with the terms of the plan (including any obligation that goes beyond the formal terms). 34. Defined benefit plans that share risks between various enterprises under common control, for example, a parent and its subsidiaries, are not multi-employer plans. 35. In respect of such a plan, if there is a contractual agreement or stated policy for charging the n....
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....ose future benefits: its only obligation is to pay the contributions as they fall due and if the enterprise ceases to employ members of the state plan, it will have no obligation to pay the benefits earned by such employees in previous years. For this reason, state plans are normally defined contribution plans. However, in the rare cases when a state plan is a defined benefit plan, an enterprise applies the treatment prescribed in paragraphs 29 and 30. Insured Benefits 40. An enterprise may pay insurance premiums to fund a post-employment benefit plan. The enterprise should treat such a plan as a defined contribution plan unless the enterprise will have (either directly, or indirectly through the plan) an obligation to either: (a) pay the employee benefits directly when they fall due; or (b) pay further amounts if the insurer does not pay all future employee benefits relating to employee service in the current and prior periods. If the enterprise retains such an obligation, the enterprise should treat the plan as a defined benefit plan. 41. The benefits insured by an insurance contract need not have a direct or aut....
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....t service: (a) as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the balance sheet date, an enterprise should recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and (b) as an expense, unless another Accounting Standard requires or permits the inclusion of the contribution in the cost of an asset (see, for example, AS 10, Accounting for Fixed Assets). 46. Where contributions to a defined contribution plan do not fall due wholly within twelve months after the end of the period in which the employees render the related service, they should be discounted using the discount rate specified in paragraph 78: Provided that a Small and Medium-sized Company, as defined in the Notification, may not discount contributions that fall due more than 12 months after the balance sheet date. Disclosure 47. An enterprise should disclose the amount recognised as an expense for defined contribution plans. 48. Where ....
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....the present value of the defined benefit obligation and the current service cost (see paragraphs 65-67); (c) determining the fair value of any plan assets (see paragraphs 100-102); (d) determining the total amount of actuarial gains and losses (see paragraphs 92-93); (e) where a plan has been introduced or changed, determining the resulting past service cost (see paragraphs 94-99); and (f) where a plan has been curtailed or settled, determining the resulting gain or loss (see paragraphs 110-116). Where an enterprise has more than one defined benefit plan, the enterprise applies these procedures for each material plan separately. 52. For measuring the amounts under paragraph 51, in some cases, estimates, averages and simplified computations may provide a reliable approximation of the detailed computations. Accounting for the Obligation under a Defined Benefit Plan 53. An enterprise should account not only for its legal obligation under the formal terms of a defined benefit plan, but also for any other obligation that arises from the enterprise s informal practi....
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.... under paragraph 55 may be negative (an asset). An enterprise should measure the resulting asset at the lower of: (a) the amount determined under paragraph 55; and (b) the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The present value of these economic benefits should be determined using the discount rate specified in paragraph 78. 60. An asset may arise where a defined benefit plan has been overfunded or in certain cases where actuarial gains are recognised. An enterprise recognises an asset in such cases because: (a) the enterprise controls a resource, which is the ability to use the surplus to generate future benefits; (b) that control is a result of past events (contributions paid by the enterprise and service rendered by the employee); and (c) future economic benefits are available to the enterprise in the form of a reduction in future contributions or a cash refund, either directly to the enterprise or indirectly to another plan in deficit. E....
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....t 64. The ultimate cost of a defined benefit plan may be influenced by many variables, such as final salaries, employee turnover and mortality, medical cost trends and, for a funded plan, the investment earnings on the plan assets. The ultimate cost of the plan is uncertain and this uncertainty is likely to persist over a long period of time. In order to measure the present value of the post-employment benefit obligations and the related current service cost, it is necessary to: (a) apply an actuarial valuation method (see paragraphs 65-67); (b) attribute benefit to periods of service (see paragraphs 68-72); and (c) make actuarial assumptions (see paragraphs 73-91). Actuarial Valuation Method 65. An enterprise should use the Projected Unit Credit Method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost. 66. The Projected Unit Credit Method (sometimes known as the accrued benefit method prorated on service or as the benefit/years of service method) considers each period of service as giving rise ....
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.... date when service by the employee first leads to benefits under the plan (whether or not the benefits are conditional on further service); until (b) the date when further service by the employee will lead to no material amount of further benefits under the plan, other than from further salary increases. 69. The Projected Unit Credit Method requires an enterprise to attribute benefit to the current period (in order to determine current service cost) and the current and prior periods (in order to determine the present value of defined benefit obligations). An enterprise attributes benefit to periods in which the obligation to provide post-employment benefits arises. That obligation arises as employees render services in return for post-employment benefits which an enterprise expects to pay in future reporting periods. Actuarial techniques allow an enterprise to measure that obligation with sufficient reliability to justify recognition of a liability. Examples Illustrating Paragraph 69 1. A defined benefit plan provides a lump-sum benefit of Rs. 100 payable on retirement for each year of service. A benefit of Rs. 100 is attributed t....
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....ne whether the obligation exists. Examples Illustrating Paragraph 70 1. A plan pays a benefit of Rs. 100 for each year of service. The benefits vest after ten years of service. A benefit of Rs. 100 is attributed to each year. In each of the first ten years, the current service cost and the present value of the obligation reflect the probability that the employee may not complete ten years of service. 2. A plan pays a benefit of Rs. 100 for each year of service, excluding service before the age of 25. The benefits vest immediately. No benefit is attributed to service before the age of 25 because service before that date does not lead to benefits (conditional or unconditional). A benefit of Rs. 100 is attributed to each subsequent year. 71. The obligation increases until the date when further service by the employee will lead to no material amount of further benefits. Therefore, all benefit is attributed to periods ending on or before that date. Benefit is attributed to individual accounting periods under the plan s benefit formula. However, if an employee s service in later years will lead to a materially higher level of benefit than in earlier years, a....
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....e employee leaves after twenty or more years of service. Under the plan s benefit formula, the enterprise attributes 4% of the present value of the expected medical costs (40% divided by ten) to each of the first ten years and 1% (10% divided by ten) to each of the second ten years. The current service cost in each year reflects the probability that the employee may not complete the necessary period of service to earn part or all of the benefits. For employees expected to leave within ten years, no benefit is attributed. 4. A post-employment medical plan reimburses 10% of an employee s postemployment medical costs if the employee leaves after more than ten and less than twenty years of service and 50% of those costs if the employee leaves after twenty or more years of service. Service in later years will lead to a materially higher level of benefit than in earlier years. Therefore, for employees expected to leave after twenty or more years, the enterprise attributes benefit on a straight-line basis under paragraph 69. Service beyond twenty years will lead to no material amount of further benefits. Therefore, the benefit attributed to each of the first twenty years is 2.5% ....
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....rates of employee turnover, disability and early retirement; (iii) the proportion of plan members with dependants who will be eligible for benefits; and (iv) claim rates under medical plans; and (b) financial assumptions, dealing with items such as: (i) the discount rate (see paragraphs 78-82); (ii) future salary and benefit levels (see paragraphs 83-87); (iii) in the case of medical benefits, future medical costs, including, where material, the cost of administering claims and benefit payments (see paragraphs 88-91); and (iv) the expected rate of return on plan assets (see paragraphs 107-109). 75. Actuarial assumptions are unbiased if they are neither imprudent nor excessively conservative. 76. Actuarial assumptions are mutually compatible if they reflect the economic relationships between factors such as ....
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....d by the present value of the defined benefit obligation throughout that period, taking account of any material changes in the obligation. The present value of the obligation will differ from the liability recognised in the balance sheet because the liability is recognised after deducting the fair value of any plan assets and because some past service cost are not recognised immediately. [Illustration I attached to the Standard illustrates the computation of interest cost, among other things] Actuarial Assumptions: Salaries, Benefits and Medical Costs 83. Post-employment benefit obligations should be measured on a basis that reflects: (a) estimated future salary increases; (b) the benefits set out in the terms of the plan (or resulting from any obligation that goes beyond those terms) at the balance sheet date; and (c) estimated future changes in the level of any state benefits that affect the benefits payable under a defined benefit plan, if, and only if, either: (i) those changes were enacted before the balance sheet date; or  ....
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....ical data about the enterprise s own experience, supplemented where necessary by historical data from other enterprises, insurance companies, medical providers or other sources. Estimates of future medical costs consider the effect of technological advances, changes in health care utilisation or delivery patterns and changes in the health status of plan participants. 90. The level and frequency of claims is particularly sensitive to the age, health status and sex of employees (and their dependants) and may be sensitive to other factors such as geographical location. Therefore, historical data is adjusted to the extent that the demographic mix of the population differs from that of the population used as a basis for the historical data. It is also adjusted where there is reliable evidence that historical trends will not continue. 91. Some post-employment health care plans require employees to contribute to the medical costs covered by the plan. Estimates of future medical costs take account of any such contributions, based on the terms of the plan at the balance sheet date (or based on any obligation that goes beyond those terms). Changes in those employee contributions result....
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....(see paragraph 65). Example Illustrating Paragraph 95 An enterprise operates a pension plan that provides a pension of 2% of final salary for each year of service. The benefits become vested after five years of service. On 1 January 20X5 the enterprise improves the pension to 2.5% of final salary for each year of service starting from 1 January 20X1. At the date of the improvement, the present value of the additional benefits for service from 1 January 20X1 to 1 January 20X5 is as follows:- Employees with more than five years' service at 1/1/X5 Rs. 150 Employees with less than five years' service at 1/1/X5 (average period until vesting : three years) Rs. 120 Rs. 270 The enterprise recognises Rs. 150 immediately because those benefits are already vested. The enterprise recognises Rs. 120 on a straight-line basis over three years from 1 January 20X5. 96. Past service cost excludes:- (a) the effect of differences between actual and previously assumed salary increases on the obligation to pay benefits for service in prior years (there is no past service cost because actuarial assumptions allow for projected salaries); &nbs....
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....5. When no market price is available, the fair value of plan assets is estimated; for example, by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the settlement of the related obligation). 101. Plan assets exclude unpaid contributions due from the reporting enterprise to the fund, as well as any non-transferable financial instruments issued by the enterprise and held by the fund. Plan assets are reduced by any liabilities of the fund that do not relate to employee benefits, for example, trade and other payables and liabilities resulting from derivative financial instruments. 102. Where plan assets include qualifying insurance policies that exactly match the amount and timing of some or all of the benefits payable under the plan, the fair value of those insurance policies is deemed to be the present value of the related obligations, as described in paragraph 55 (subject to any reduction required if the amounts receivable under the insurance policies are not recoverable in full). Reimburse....
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....ssets 107. The expected return on plan assets is a component of the expense recognised in the statement of profit and loss. The difference between the expected return on plan assets and the actual return on plan assets is an actuarial gain or loss. 108. The expected return on plan assets is based on market expectations, at the beginning of the period, for returns over the entire life of the related obligation. The expected return on plan assets reflects changes in the fair value of plan assets held during the period as a result of actual contributions paid into the fund and actual benefits paid out of the fund. 109. In determining the expected and actual return on plan assets, an enterprise deducts expected administration costs, other than those included in the actuarial assumptions used to measure the obligation. Example Illustrating Paragraph 108 At 1 January 20X1, the fair value of plan assets was Rs. 10,000. On 30 June 20X1, the plan paid benefits of Rs. 1,900 and received contributions of Rs. 4,900. At 31 December 20X1, the fair value of plan assets was Rs. 15,000 and the present value of the defined benefit obligation was Rs. 14,792. Actuarial losses on the obl....
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....r otherwise, to make a material reduction in the number of employees covered by a plan; or (b) amends the terms of a defined benefit plan such that a material element of future service by current employees will no longer qualify for benefits, or will qualify only for reduced benefits. A curtailment may arise from an isolated event, such as the closing of a plant, discontinuance of an operation or termination or suspension of a plan. An event is material enough to qualify as a curtailment if the recognition of a curtailment gain or loss would have a material effect on the financial statements. Curtailments are often linked with a restructuring. Therefore, an enterprise accounts for a curtailment at the same time as for a related restructuring. 113. A settlement occurs when an enterprise enters into a transaction that eliminates all further obligations for part or all of the benefits provided under a defined benefit plan, for example, when a lump-sum cash payment is made to, or on behalf of, plan participants in exchange for their rights to receive specified post-employment benefits. 114. In some cases, an enterprise acquires an insurance policy to fund....
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.... After curtailment gain curtailment Net present value of obligation 1,000 (100) 900 Fair value of plan assets (820) - (820) 180 (100) 80 Unrecognised past service cost (50) 5 (45) Unrecognised transitional amount (100x4/5) (80) 8 (72) Net liability recognised in balance sheet (50) (87) (37) An asset of Rs. 37 will be recognised [it is assumed that the amount under paragraph 59(b) is higher than Rs. 37]. Provided that a Small and Medium-sized Company, as defined in the Notification, may not apply the recognition and measurement principles laid down in paragraph 50 to 116 in respect of accounting for defined benefit plans. However, such a company should actuarially determine and provide for the accrued liability in respect of defined benefit plans as follows: The method used for a actuarial valuation should be the Projected Unit Credit Method The discount rate used sh....
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.... a currency different from the enterprise s reporting currency, (vi) benefits paid, (vii) past service cost, (viii) amalgamations, (ix) curtailments, and (x) settlements. (d) an analysis of the defined benefit obligation into amounts arising from plans that are wholly unfunded and amounts arising from plans that are wholly or partly funded. (e) a reconciliation of the opening and closing balances of the fair value of plan assets and of the opening and closing balances of any reimbursement right recognised as an asset in accordance with paragraph 103 showing separately, if applicable, the effects during the period attributable to each of the following: (i) expected return on plan assets, (ii) actuarial gains and losses, ....
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.... paragraph 59(b), i.e., the extent to which the amount determined in accordance with paragraph 55 (if negative) exceeds the amount determined in accordance with paragraph 59 (h) for each major category of plan assets, which should include, but is not limited to, quity instruments, debt instruments, property, and all other assets, the percentage or amount that each major category constitutes of the fair value of the total plan assets. (i) the amounts included in the fair value of plan assets for: (i) each category of the enterprise s own financial instruments; and (ii) any property occupied by, or other assets used by, the enterprise. (j) a narrative description of the basis used to determine the overall expected rate of return on assets, including the effect of the major categories of plan assets. (k) the actual return on plan assets, as well as the actual return on any reimbursement right recognised as an asset in accordance with paragraph 103; and  ....
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.... value of the plan assets and the surplus or deficit in the plan; and (ii) the experience adjustments arising on: (A) the plan liabilities expressed either as (1) an amount or (2) a percentage of the plan liabilities at the balance sheet date, and (B) the plan assets expressed either as (1) an amount or (2) a percentage of the plan assets at the balance sheet date. (o) the employer s best estimate, as soon as it can reasonably be determined, of contributions expected to be paid to the plan during the annual period beginning after the balance sheet date. 121. Paragraph 120(b) requires a general description of the type of plan. Such a description distinguishes, for example, flat salary pension plans from final salary pension plans and from post-employment medical plans. The description of the plan should include informal practices that give rise to other obligations included in the measurement of the defined benefit obligat....
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.... the related service; and (e) deferred compensation paid twelve months or more after the end of the period in which it is earned. 128. In case of other long-term employee benefits, the introduction of, or changes to, other long-term employee benefits rarely causes a material amount of past service cost. For this reason, this Standard requires a simplified method of accounting for other long-term employee benefits. This method differs from the accounting required for post-employment benefits insofar as that all past service cost is recognised immediately. Recognition and Measurement 129. The amount recognised as a liability for other long-term employee benefits should be the net total of the following amounts: (a) the present value of the defined benefit obligation at the balance sheet date (see paragraph 65); (b) minus the fair value at the balance sheet date of plan assets (if any) out of which the obligations are to be settled directly (see paragraphs 100-102). In measuring the liability, an enterprise should apply paragraphs 49-91, excluding paragraphs 55 and 61. An enterprise should ....
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....uch benefits is of such size, nature or incidence that its disclosure is relevant to explain the performance of the enterprise for the period (see AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies). Where required by AS 18 Related Party Disclosures an enterprise discloses information about other long-term employee benefits for key management personnel. Termination Benefits 133. This Standard deals with termination benefits separately from other employee benefits because the event which gives rise to an obligation is the termination rather than employee service. Recognition 134. An enterprise should recognise termination benefits as a liability and an expense when, and only when: (a) the enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. 135. An enterprise may be committed, by legislation, by contractual or other agreements with employee....
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.... outflow in settlement is remote. 141. As required by AS 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies an enterprise discloses the nature and amount of an expense if it is of such size, nature or incidence that its disclosure is relevant to explain the performance of the enterprise for the period. Termination benefits may result in an expense needing disclosure in order to comply with this requirement. 142. Where required by AS 18, Related Party Disclosures an enterprise discloses information about termination benefits for key management personnel. Transitional Provisions 142A. An enterprise may disclose the amounts required by paragraph 120(n) as the amounts are determined for each accounting period prospectively from the date the enterprise first adopts this Standard. Employee Benefits other than Defined Benefit Plans and Termination Benefits 143. Where an enterprise first adopts this Standard for employee benefits, the difference (as adjusted by any related deferred tax expense) between the liability in respect of employee benefits other than defined benefit plans and termination benefits, as per this Standard, exis....
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....ng balance of revenue reserves and surplus. Example Illustrating Paragraphs 144 and 145 At March 31, 20X7, an enterprise's balance sheet includes a pension liability of Rs. 100, recognised as per the pre-revised AS 15 issued by the ICAI in 1995. The enterprise adopts the Standard as of April 1, 20X7, when the present value of the obligation under the Standard is Rs. 1,300 and the fair value of plan assets is Rs. 1,000. On April 1, 20X1, the enterprise had improved pensions (cost for non-vested benefits: Rs. 160; and average remaining period at that date until vesting: 10 years). (Amount in Rs.) The transitional effect is as follows : Present value of the obligation 1,300 Fair value of plan assets (1,000) Less: past service cost to be recognized in later periods (160 x 4/10) (64) Transitional liability 236 Liability already recognised 100 Increase in liability 136 An enterprise may choose to recognise the increase in liability (as adjusted by any related tax expense) either immediately as an adjustment against the opening balance of revenue reserve and surplus as on April 1, 20X7 or as an expense on straight line basis ove....
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....0 140 150 Benefits paid 150 180 190 Contributions paid 90 100 110 Present value of obligation at 31 March 1,141 1,197 1,295 Fair value of plan assets at 31 March 1,092 1,109 1,093 Expected average remaining working lives of employees (years) 10 10 10 In 20X5-X6, the plan was amended to provide additional benefits with effect from 1 April 20X5. The present value as at 1 April 20X5 of additional benefits for employee service before 1 April 20X5 was Rs. 50 for vested benefits and Rs. 30 for non-vested benefits. As at 1 April 20X5, the enterprise estimated that the average period until the non-vested benefits would become vested was three years; the past service cost arising from additional non-vested benefits is therefore recognised on a straight-line basis over three years. The past service cost arising from additional vested benefits is recognised immediately (paragraph 94 of the Standard). Changes in the Present Value of the Obligation and in the Fair Value of the Plan Assets The first step is to summarise the changes in the present value of the obligation and in the fair value of the plan assets and use ....
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....s 139 119 234 Actual return on plan assets: Expected return on plan assets 120 121 114 Actuarial gain (loss) on plan assets 32 (24 (50) Actual return on plan assets 152 97 64 Note.-See example illustrating paragraphs 103-105 for presentation of reimbursements. Illustration II Illustrative Disclosures This illustration is illustrative only and does not form part of the Standard. The purpose of this illustration is to illustrate the application of the Standard to assist in clarifying its meaning. Extracts from notes to the financial statements show how the required disclosures may be aggregated in the case of a large multi-national group that provides a variety of employee benefits. These extracts do not necessarily provide all the information required under the disclosure and presentation requirements of AS 15 and other Accounting Standards. In particular, they do not illustrate the disclosure of: (a) accounting policies for employee benefits (see AS 1 Disclosure of Accounting Policies). Paragraph 120(a) of the Standard requires this disclosure to include the en....
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....of are as follows: Defined benefit pension plans Post-employment medical benefits 20X5-X6 20X4-X5 20X5-X6 20X4-X5 Opening defined benefit obligation 18,400 11,600 6,405 5,439 Service cost 850 750 479 411 Interest cost 950 1,000 803 705 Actuarial losses (gains) 2,350 950 250 400 Losses (gains) on curtailments (500) - Liabilities extinguished on settlements - (350) Liabilities assumed in an amalgamation in the nature of purchase - 5,000 Exchange differences on foreign plans 900 (150) Benefits paid (650) (400) (600) (550) Closing defined benefit obligation 22,300 18,400 7,337 6,405 Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows: Defined benefit pension plans 20X5-X6 20X4-X5 Opening fair value of plan assets 17,280 9,200 Expected return 900 650 Actuarial gains and (loss....