Liabilities for long-term employee benefits
Liabilities for long-term employee benefits
Scope
Post-employment benefits, such as pensions and other retirement benefits, and any other long-term benefit that represents economic compensation payable on a deferred basis with respect to when the service is provided.
Long-term defined contribution obligations
Contributions of a predetermined nature to a separate entity –such as an insurance company or a pension plan-, provided that the entity does not have the legal, contractual or implicit obligation to make additional contributions if the separate entity is unable to meet the obligations assumed.
Defined contribution obligations give rise to a liability when there are accrued contributions payable at the end of the reporting period.
Long-term defined benefit obligations
Long-term defined benefit obligations relate to long-term employee benefits payable that are not based on defined contributions.
The amount recognised as a provision for long-term benefits payable is the difference between the present value of the benefit obligations and the fair value of the plan assets with which the obligations will be settled.
Plan assets are assets that are not owned by the entity but rather by a legally separate third party and which may only be used to pay employee benefits, such as insurance policies, for example.
Liabilities for long-term employee benefits
At the end of the reporting period any changes in the present value of the benefit obligations or, as the case may be, the plan assets, arising from actuarial gains or losses, are recognised directly in equity (in reserves) in the year in which they arise.
The past service costs arising from the establishment or improvement of a post-employment long-term defined benefit plan are charged to profit or loss:
Immediately, in the case of vested rights.
On a straight-line basis over the average period remaining until the past service rights vest, in the case of revocable rights.
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