Exam 12: Accounting for Employee Benefits

Post-employment benefits include:

When employees finish their time with their employer,it is normal practice to pay them for any annual leave earned but not taken.

Which of the following is ­not considered compensated absences under AASB 119Employee Benefits?

There are no accounting requirements relating to how superannuation plans should account for the plan's assets,liabilities,expenses and revenues.

AASB 119 defines employees as 'natural persons (including a director)appointed or engaged under a contract for services who is subject to the directions of an employer in respect of the manner of execution of those services,whether on a full-time,part-time,permanent,casual or temporary basis'.

An employee whose contract for service includes an entitlement to 1 week's cumulative sick leave per annum will be entitled to how many weeks' sick leave after 3 years' employment if no sick leave has been taken?

Any employee benefit that is incurred by the employer during the period and that contributes to the generation of items expected to provide future economic benefits for the employer may be capitalised as an asset.

When determining accounting entries to be made in relation to the defined benefit liability of an entity,AASB 119 Employee Benefits requires actuarial gains and losses to be recognised as part of the income or expense of the period.

Entity A contributes to a defined benefit superannuation plan for its employees.It calculates the following: Current service cost 12785 Interest cost 983 Expected return on plan assets (1150) Net actuarial gain recognised in period The 'Expected return on plan assets (1150)' represents:

Entity A contributes to a defined benefit superannuation plan for its employees.It calculates the following: Present value of the obligation 12286 Fair value of plan assets The $786 represents:

The expense recognised by an employer for a defined benefit superannuation plan:

Major Ltd has a weekly payroll of $30 000.Its employees work a 5-day week (Monday to Friday)and are paid on Thursdays in arrears (i.e.for the five days up to,and including,the Thursday).Pay-as-you-go tax on the weekly payroll is $10 000 and this is paid to the Australian Tax Office on the following Monday.Deductions of $1000 are also made on behalf of employees to pay into a medical benefits fund.The year ended 30 June 2014 falls on a Wednesday.What is the accounting entry to record accrued salaries and wages for this period?

A defined contribution superannuation plan is one in which:

To determine whether the employer has any outstanding obligation for superannuation at year end we need to:

Trailers of the World has a small group of four employees.Trailers take part in a defined contribution plan and pay the required government contribution of 9% plus an additional 4% to reward its employees.Based on the employee earnings below,what is Trailers' superannuation obligation for the year? Employee Fortnightly salary Johnson 1200 Stevens 1800 Carey 1500 Peters 2500

Post-employment benefits can include the employee's insurance and medical costs.

The causes of actuarial gains and losses when accounting for defined benefit superannuation plans includes:

Long-service leave must be accrued and recorded as a liability from the first day of employment.

Midrift Ltd has nine employees who are entitled to long-service leave (LSL).The LSL can be taken after 12 years of service,at which time the employee is entitled to 15 weeks' leave.After 10 years the employee is entitled to a pro rata cash payment on leaving the company.Information about the employees is set out below. No. of employees Current salary per employee Years of service Probability \% that LSL will be paid 3 50000 6 45 3 65000 8 80 3 70000 11 100 Other information collected: Periods to maturity Corporate bond rate (\%) Risk-adjusted discount rate for Midrift Ltd (\%) 6 8.50 9.00 4 7.25 8.50 2 5.75 6.75 The inflation rate for the foreseeable future is 1.5%.The future salaries of the employees are expected to keep pace with inflation but not increase as a result of promotion.If the opening balance of the LSL provision is $87 560 what is the entry to record LSL expense for the current period (round amounts to the nearest dollar)?

Dervish Ltd has an average weekly payroll of $800 000.The employees are entitled to 2 weeks',non-vesting sick leave per annum.Past experience suggests that 66% of employees will take the full 2 weeks' sick leave and 15% will take 1 week's leave each year.The rest of the employees take no sick leave.What weekly entry would Dervish make in relation to sick leave?