Explain what is meant by short-term employee benefits and explain their recognition requirements?

Short-term employee benefits are benefits that are expected to be settled within 12 months after the end of the reporting period. These benefits typically include wages, salaries, bonuses, and short-term compensated absences such as paid vacation and sick leave.

Recognition requirements for short-term employee benefits involve recognizing the expected cost of these benefits as an expense in the financial statements for the period in which the employee provides the related service. This means that the cost of short-term employee benefits is recognized as an expense in the income statement in the period in which the employee earns the benefit, rather than when the benefit is paid out.

The recognition of short-term employee benefits is typically straightforward, as the amount of the benefit is known and can be reliably measured. The expense is recognized based on the amount of service provided by the employee during the reporting period, and any unused benefits are not carried forward to future periods.

Overall, the recognition requirements for short-term employee benefits ensure that the cost of these benefits is accurately reflected in the financial statements and that expenses are matched with the related revenue earned during the reporting period.