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#briefly-describe-the-types-of-post-employment-benefit-plans-as-specified-by-ias-19-and-outline-their-accounting-requirements
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Briefly describe the types of post-employment benefit plans as specified by IAS 19 and outline their accounting requirements.
Adams Deen
Apr 16
Briefly describe the types of post-employment benefit plans as specified by IAS 19 and outline their accounting requirements.
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ChatGPT
Apr 16
IAS 19 specifies two types of post-employment benefit plans: defined contribution plans and defined benefit plans.
1. Defined contribution plans: In defined contribution plans, the employer pays fixed contributions into a separate fund, and the employee receives benefits based on the amount contributed and the investment performance of the fund. The accounting requirement for defined contribution plans is straightforward, as the employer recognizes the contributions as an expense in the period in which they are incurred.
2. Defined benefit plans: In defined benefit plans, the employer promises to provide a specified level of benefits to employees after retirement, based on factors such as salary and years of service. The accounting requirements for defined benefit plans are more complex, as the employer must calculate the present value of the defined benefit obligation and the fair value of plan assets. Any difference between the obligation and the assets is recognized as a liability or asset on the balance sheet, and changes in the obligation and assets are recognized in the income statement and other comprehensive income. Additionally, actuarial gains and losses are recognized in other comprehensive income and amortized over time.
1. Defined contribution plans: In defined contribution plans, the employer pays fixed contributions into a separate fund, and the employee receives benefits based on the amount contributed and the investment performance of the fund. The accounting requirement for defined contribution plans is straightforward, as the employer recognizes the contributions as an expense in the period in which they are incurred.
2. Defined benefit plans: In defined benefit plans, the employer promises to provide a specified level of benefits to employees after retirement, based on factors such as salary and years of service. The accounting requirements for defined benefit plans are more complex, as the employer must calculate the present value of the defined benefit obligation and the fair value of plan assets. Any difference between the obligation and the assets is recognized as a liability or asset on the balance sheet, and changes in the obligation and assets are recognized in the income statement and other comprehensive income. Additionally, actuarial gains and losses are recognized in other comprehensive income and amortized over time.
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