if the termination benefits are not expected to be settled wholly
before twelve months after the end of the annual reporting period, the entity shall apply the requirements for other long-term employee benefits.
Because termination benefits are not provided in exchange for service,
paragraphs 70-74 relating to the attribution of the benefit to periods of service are not relevant.
Example illustrating paragraphs 159-170
As a result of a recent acquisition, an entity plans to close a factory in ten
months and, at that time, terminate the employment of all of the remaining
employees at the factory. Because the entity needs the expertise of the
employees at the factory to complete some contracts, it announces a plan of termination as follows.
Each employee who stays and renders service until the closure of the factory will receive on the termination date a cash payment of CU30,000. Employees leaving before closure of the factory will receive CU10,000.
There are 120 employees at the factory. At the time of announcing the plan,
the entity expects 20 of them to leave before closure. Therefore, the total
expected cash outflows under the plan are CU3,200,000 (ie 20 × CU10,000 +
100 × CU30,000). As required by paragraph 160, the entity accounts for
benefits provided in exchange for termination of employment as termination
benefits and accounts for benefits provided in exchange for services as short-term employee benefits.
The benefit provided in exchange for termination of employment is
CU10,000. This is the amount that an entity would have to pay for
terminating the employment regardless of whether the employees stay and render service until closure of the factory or they leave before closure. Even
though the employees can leave before closure, the termination of all
employees' employment is a result of the entity's decision to close the factory
and terminate their employment (ie all employees will leave employment
when the factory closes). Therefore the entity recognises a liability of
CU1,200,000 (ie 120 × CU10,000) for the termination benefits provided in
accordance with the employee benefit plan at the earlier of when the plan of
termination is announced and when the entity recognises the restructuring costs associated with the closure of the factory.
Benefits provided in exchange for service
The incremental benefits that employees will receive if they provide services
for the full ten-month period are in exchange for services provided over that
period. The entity accounts for them as short-term employee benefits
because the entity expects to settle them before twelve months after the end of the annual reporting period. In this example, discounting is not required,
so an expense of CU200,000 (ie CU2,000,000 ÷ 10) is recognised in each month during the service period of ten months, with a corresponding increase in the carrying amount of the liability.
Although this Standard does not require specific disclosures about termination
benefits, other IFRSs may require disclosures. For example, IAS 24 requires
disclosures about employee benefits for key management personnel. IAS 1
requires disclosure of employee benefits expense.
Transition and effective date
An entity shall apply this Standard for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an entity applies this Standard for an earlier period, it shall disclose that fact.
An entity shall apply this Standard retrospectively, in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors, except that:
an entity need not adjust the carrying amount of assets outside the scope
of this Standard for changes in employee benefit costs that were included in the carrying amount before the date of initial application. The date of initial application is the beginning of the earliest prior period presented in the first financial statements in which the entity adopts this Standard.
in financial statements for periods beginning before 1 January 2014, an entity need not present comparative information for the disclosures required by paragraph 145 about the sensitivity of the defined benefit obligation.
IFRS 13, issued in May 2011, amended the definition of fair value in paragraph 8 and amended paragraph 113. An entity shall apply those amendments when it applies IFRS 13.
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19), issued in November 2013, amended paragraphs 93-94. An entity shall apply those amendments for annual periods beginning on or after 1 July 2014 retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact.
This appendix is an integral part of the IFRS. It describes the application of paragraphs 92-93 and has the same authority as the other parts of the IFRS.
The accounting requirements for contributions from employees or third parties
are illustrated in the diagram below.
Contributions from employees or third parties
Set out in the formal terms of the plan (or arise from a constructive obligation that goes beyond those terms)
Linked to service Not linked to service
reduce a deficit)
Dependent on the number of
years of service
cost by being
periods of service (paragraph 93(a))
the number of
years of service
Reduce service cost in the period
in which the
This dotted arrow means that an entity is permitted to choose either accounting.
Amendments to other IFRSs
This appendix sets out amendments to other IFRSs that are a consequence of the Board amending IAS 19 in June 2011. An entity shall apply these amendments when it applies IAS 19 as amended. Amended paragraphs are shown with new text underlined and deleted text struck through.
The amendments contained in this appendix when this Standard was amended in 2011 have been incorporated into the relevant IFRSs published in this volume
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