HKAS 19 - Employee Benefits

INTRODUCTION

HKAS 19 *Employee Benefits* prescribes the accounting and disclosure by employers for employee benefits. The Standard does not deal with reporting by employee benefit plans (see HKAS 26 *Accounting and Reporting by Retirement Benefit Plans*).

The Standard identifies four categories of employee benefits:

(a) Short-term employee benefits – such as wages, salaries, social security contributions, paid annual leave, paid sick leave, profit-sharing, bonuses, and non-monetary benefits (medical care, housing, cars, free or subsidised goods/services) for current employees, if expected to be settled wholly before twelve months after the end of the annual reporting period in which employees render the related services.

(b) Post-employment benefits – such as retirement benefits (pensions, lump sum payments on retirement), post-employment life insurance, and post-employment medical care.

(c) Other long-term employee benefits – such as long-service leave, sabbatical leave, jubilee or other long-service benefits, and long-term disability benefits.

(d) Termination benefits – benefits payable as a result of an entity's decision to terminate employment before normal retirement date or an employee's decision to accept voluntary redundancy.

OBJECTIVE (Paragraph 1)

The objective is to prescribe accounting and disclosure for employee benefits. The Standard requires an entity to recognise:

(a) A liability when an employee has provided service in exchange for employee benefits to be paid in the future.

(b) An expense when the entity consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.

SCOPE (Paragraphs 2-7)

Paragraph 2: This Standard shall be applied by an employer in accounting for all employee benefits, except those to which HKFRS 2 *Share-based Payment* applies.

Paragraph 3: This Standard does not deal with reporting by employee benefit plans (see HKAS 26).

Paragraph 4: Employee benefits include those provided:

Under formal plans or formal agreements

Under legislative requirements or industry arrangements

By informal practices that give rise to a constructive obligation

Paragraph 5: Employee benefits include:

Short-term employee benefits

Post-employment benefits

Other long-term employee benefits

Termination benefits

Paragraph 6: Benefits may be provided to employees, their dependants, or beneficiaries, and may be settled by payments or provision of goods/services.

Paragraph 7: Employees include directors and other management personnel, whether full-time, part-time, permanent, casual, or temporary.

DEFINITIONS (Paragraph 8)

Definitions of Employee Benefits

Term	Definition
Employee benefits	All forms of consideration given by an entity in exchange for service rendered by employees or for termination of employment
Short-term employee benefits	Employee benefits (other than termination benefits) expected to be settled wholly before twelve months after the end of the annual reporting period in which employees render the related service
Post-employment benefits	Employee benefits (other than termination benefits and short-term employee benefits) payable after completion of employment
Other long-term employee benefits	All employee benefits other than short-term employee benefits, post-employment benefits, and termination benefits
Termination benefits	Employee benefits provided in exchange for termination of employment as a result of either an entity's decision to terminate employment before normal retirement date or an employee's decision to accept an offer of benefits

Definitions Relating to Classification of Plans

Term	Definition
Post-employment benefit plans	Formal or informal arrangements under which an entity provides post-employment benefits for one or more employees
Defined contribution plans	Post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits
Defined benefit plans	Post-employment benefit plans other than defined contribution plans
Multi-employer plans	Defined contribution or defined benefit plans (other than state plans) that pool assets contributed by various entities not under common control and use those assets to provide benefits to employees of more than one entity

Definitions Relating to Net Defined Benefit Liability (Asset)

Term	Definition
Net defined benefit liability (asset)	The deficit or surplus, adjusted for any effect of limiting a net defined benefit asset to the asset ceiling
Deficit or surplus	The present value of the defined benefit obligation less the fair value of plan assets (if any)
Asset ceiling	The present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan
Present value of a defined benefit obligation	The present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods
Plan assets	Assets held by a long-term employee benefit fund and qualifying insurance policies
Fair value	The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (see HKFRS 13)

Definitions Relating to Defined Benefit Cost

Term	Definition
Service cost	Current service cost + past service cost + any gain or loss on settlement
Current service cost	Increase in present value of defined benefit obligation resulting from employee service in the current period
Past service cost	Change in present value of defined benefit obligation for employee service in prior periods, resulting from a plan amendment or curtailment
Net interest on the net defined benefit liability (asset)	Change during the period in the net defined benefit liability (asset) that arises from the passage of time
Remeasurements of the net defined benefit liability (asset)	Actuarial gains and losses + return on plan assets (excluding amounts in net interest) + any change in effect of asset ceiling (excluding amounts in net interest)
Actuarial gains and losses	Changes in present value of defined benefit obligation resulting from experience adjustments and changes in actuarial assumptions
Return on plan assets	Interest, dividends, and other income from plan assets, plus realised and unrealised gains/losses, less costs of managing plan assets and tax payable by the plan itself
Settlement	A transaction that eliminates all further legal or constructive obligations for part or all of the benefits provided under a defined benefit plan

SHORT-TERM EMPLOYEE BENEFITS (Paragraphs 9-25)

Recognition and Measurement

Paragraph 11: When an employee has rendered service during an accounting period, the entity shall recognise the undiscounted amount of short-term employee benefits expected to be paid:

(a) As a liability (accrued expense), after deducting any amount already paid. If amount paid exceeds the undiscounted amount, recognise an asset (prepaid expense).

(b) As an expense, unless another HKFRS requires inclusion in cost of an asset.

Short-term Paid Absences (Paragraphs 13-18)

Paragraph 13: Recognition of expected cost of paid absences:

(a) Accumulating paid absences – when employees render service that increases their entitlement to future paid absences.

(b) Non-accumulating paid absences – when the absences occur.

Paragraph 15: Accumulating paid absences may be vesting (cash payment for unused entitlement on leaving) or non-vesting (no cash payment). An obligation exists even for non-vesting absences, though the possibility of employees leaving before using the entitlement affects measurement.

Paragraph 16: Measure the expected cost of accumulating paid absences as the additional amount the entity expects to pay as a result of unused entitlement accumulated at the end of the reporting period.

Example (Paragraphs 16-17): An entity has 100 employees, each entitled to 5 days paid sick leave per year. Unused sick leave may be carried forward one year (LIFO basis). At 31 Dec 20X1, average unused entitlement is 2 days per employee. The entity expects 92 employees will take no more than 5 days in 20X2, and 8 employees will take an average of 6.5 days each. The entity expects to pay an additional 12 days of sick pay (1.5 days × 8 employees). Therefore, recognise a liability equal to 12 days of sick pay.

Profit-sharing and Bonus Plans (Paragraphs 19-24)

Paragraph 19: Recognise expected cost of profit-sharing and bonus payments when, and only when:

(a) The entity has a present legal or constructive obligation to make such payments as a result of past events.

(b) A reliable estimate of the obligation can be made.

Paragraph 20: If employees must remain with the entity for a specified period to receive profit-sharing, the measurement reflects the possibility that some employees may leave without receiving payments.

Example (Paragraph 20): A profit-sharing plan requires an entity to pay 3% of profit to employees who serve throughout the year. Staff turnover will reduce payments to 2.5% of profit. The entity recognises a liability and expense of 2.5% of profit.

Paragraph 22: A reliable estimate can be made when:

The formal terms contain a formula for determining the benefit amount.

The entity determines amounts before financial statements are authorised for issue.

Past practice gives clear evidence of the constructive obligation.

Paragraph 23: The cost of profit-sharing and bonus plans is recognised as an expense, not as a distribution of profit.

Paragraph 24: If profit-sharing and bonus payments are not expected to be settled wholly before twelve months after the end of the reporting period, they are other long-term employee benefits.

POST-EMPLOYMENT BENEFITS: DISTINCTION BETWEEN DEFINED CONTRIBUTION PLANS AND DEFINED BENEFIT PLANS (Paragraphs 26-49)

Classification

Paragraph 27: Post-employment benefit plans are classified as either defined contribution plans or defined benefit plans, depending on the economic substance of the plan.

Paragraph 28: Under defined contribution plans, the entity's legal or constructive obligation is limited to the amount it agrees to contribute. Actuarial risk and investment risk fall on the employee.

Paragraph 29: Examples where an entity's obligation is not limited to contributions:

Plan benefit formula not linked solely to contributions

Guarantee of a specified return on contributions

Informal practices giving rise to a constructive obligation

Paragraph 30: Under defined benefit plans:

The entity's obligation is to provide agreed benefits.

Actuarial risk and investment risk fall on the entity.

Multi-employer Plans (Paragraphs 32-39)

Paragraph 32: An entity shall classify a multi-employer plan as a defined contribution or defined benefit plan under the terms of the plan (including any constructive obligation).

Paragraph 33: If an entity participates in a multi-employer defined benefit plan, it shall:

(a) Account for its proportionate share of the defined benefit obligation, plan assets, and cost.

(b) Disclose information required by paragraphs 135-148 (excluding 148(d)).

Paragraph 34: When sufficient information is not available for defined benefit accounting:

(a) Account for the plan as if it were a defined contribution plan.

(b) Disclose information required by paragraph 148.

Paragraph 36: Insufficient information may occur if:

The plan exposes participating entities to actuarial risks of other entities' employees.

The entity does not have access to sufficient information.

Paragraph 37: If there is a contractual agreement determining how surplus/deficit is distributed, a participant accounting for the plan as a defined contribution plan shall recognise the asset or liability arising from the contractual agreement.

Example (Paragraph 37): An entity participates in a multi-employer defined benefit plan that does not prepare HKAS 19 valuations. A non-HKAS 19 funding valuation shows a deficit of CU100 million. The plan has a contractual schedule of contributions; the entity's total contributions are CU8 million. The entity recognises a liability for the contributions adjusted for time value of money and an equal expense.

Paragraph 38: Group administration plans are distinct from multi-employer plans. They are aggregations of single employer plans for investment purposes only.

Paragraph 39: For wind-up or withdrawal from a multi-employer defined benefit plan, apply HKAS 37.

Defined Benefit Plans Sharing Risks Between Entities Under Common Control (Paragraphs 40-42)

Paragraph 40: Such plans are not multi-employer plans.

Paragraph 41: An entity participating in such a plan shall obtain information about the plan as a whole. If there is a contractual agreement for charging net defined benefit cost to individual group entities, recognise the net defined benefit cost so charged. If no such agreement, the net defined benefit cost is recognised in the separate financial statements of the sponsoring employer.

Paragraph 42: Participation is a related party transaction; disclose information required by paragraph 149.

State Plans (Paragraphs 43-45)

Paragraph 43: Account for a state plan in the same way as a multi-employer plan.

Paragraph 45: State plans are normally defined contribution plans because the entity has no legal or constructive obligation to pay future benefits beyond contributions due.

Insured Benefits (Paragraphs 46-49)

Paragraph 46: An entity shall treat an insurance-funded plan as a defined contribution plan unless the entity retains a legal or constructive obligation to pay benefits directly or pay further amounts if the insurer does not pay.

Paragraph 48: If the entity retains a legal or constructive obligation:

Account for a qualifying insurance policy as a plan asset.

Recognise other insurance policies as reimbursement rights.

Paragraph 49: If the insurance policy is in the name of a specified participant and the entity has no obligation to cover any loss, treat payments as contributions to a defined contribution plan.

POST-EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION PLANS (Paragraphs 50-54)

Recognition and Measurement

Paragraph 51: When an employee has rendered service, recognise the contribution payable:

(a) As a liability (accrued expense), after deducting any contribution already paid. If contribution paid exceeds contribution due, recognise an asset (prepaid expense).

(b) As an expense, unless another HKFRS requires inclusion in cost of an asset.

Paragraph 52: When contributions are not expected to be settled wholly before twelve months after the end of the reporting period, they shall be discounted using the discount rate specified in paragraph 83.

Disclosure

Paragraph 53: Disclose the amount recognised as an expense for defined contribution plans.

POST-EMPLOYMENT BENEFITS: DEFINED BENEFIT PLANS (Paragraphs 55-152)

Recognition and Measurement (Paragraphs 56-60)

Paragraph 57: Accounting for defined benefit plans involves the following steps:

(a) Determining the deficit or surplus:

(i) Use the projected unit credit method to estimate the ultimate cost.

(ii) Discount the benefit to determine present value of defined benefit obligation and current service cost.

(iii) Deduct fair value of plan assets from present value of defined benefit obligation.

(b) Determining the net defined benefit liability (asset): The deficit or surplus adjusted for any effect of limiting a net defined benefit asset to the asset ceiling.

(c) Determining amounts to be recognised in profit or loss:

(i) Current service cost

(ii) Past service cost and gain/loss on settlement

(iii) Net interest on the net defined benefit liability (asset)

(d) Determining remeasurements to be recognised in other comprehensive income:

(i) Actuarial gains and losses

(ii) Return on plan assets (excluding amounts in net interest)

(iii) Any change in effect of asset ceiling (excluding amounts in net interest)

Paragraph 58: Determine the net defined benefit liability (asset) with sufficient regularity that amounts do not differ materially from amounts determined at the end of the reporting period.

Accounting for the Constructive Obligation (Paragraphs 61-62)

Paragraph 61: Account not only for the legal obligation but also for any constructive obligation arising from informal practices where the entity has no realistic alternative but to pay employee benefits.

Statement of Financial Position (Paragraphs 63-65)

Paragraph 63: Recognise the net defined benefit liability (asset) in the statement of financial position.

Paragraph 64: When there is a surplus, measure the net defined benefit asset at the lower of:

(a) The surplus in the defined benefit plan.

(b) The asset ceiling, determined using the discount rate specified in paragraph 83.

Recognition and Measurement: Present Value of Defined Benefit Obligations and Current Service Cost (Paragraphs 66-98)

Actuarial Valuation Method

Paragraph 67: Use the projected unit credit method to determine the present value of defined benefit obligations, current service cost, and past service cost.

Example (Paragraph 68): A lump sum benefit of 1% of final salary for each year of service. Salary in year 1 is CU10,000, increasing at 7% compound each year. Discount rate is 10% per year. Employee expected to leave at end of year 5.

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| Year | 1 | 2 | 3 | 4 | 5 |

|------|---|---|---|---|---|

| Benefit attributed – prior years | 0 | 131 | 262 | 393 | 524 |

| Benefit attributed – current year | 131 | 131 | 131 | 131 | 131 |

| Benefit attributed – current and prior years | 131 | 262 | 393 | 524 | 655 |

| Opening obligation | – | 89 | 196 | 324 | 476 |

| Interest at 10% | – | 9 | 20 | 33 | 48 |

| Current service cost | 89 | 98 | 108 | 119 | 131 |

| Closing obligation | 89 | 196 | 324 | 476 | 655 |

Attributing Benefit to Periods of Service (Paragraphs 70-74)

Paragraph 70: Attribute benefit to periods of service under the plan's benefit formula. However, if an employee's service in later years will lead to a materially higher level of benefit than in earlier years, attribute benefit on a straight-line basis from:

(a) The date when service first leads to benefits.

(b) Until the date when further service will lead to no material amount of further benefits (other than from further salary increases).

Example 1 (Paragraph 71): A plan provides a lump sum benefit of CU100 payable on retirement for each year of service. A benefit of CU100 is attributed to each year. Current service cost is the present value of CU100.

Example 2 (Paragraph 71): A plan provides a monthly pension of 0.2% of final salary for each year of service, payable from age 65. Benefit equal to the present value at expected retirement date of a monthly pension of 0.2% of estimated final salary is attributed to each year.

Example 1 (Paragraph 72): A plan pays CU100 for each year of service, vesting after 10 years. A benefit of CU100 is attributed to each year. In each of the first 10 years, current service cost and present value of obligation reflect the probability that the employee may not complete 10 years of service.

Example 2 (Paragraph 72): A plan pays CU100 for each year of service, excluding service before age 25. Benefits vest immediately. No benefit is attributed to service before age 25.

Example 1 (Paragraph 73): A plan pays a lump sum of CU1,000 that vests after 10 years with no further benefit. A benefit of CU100 (CU1,000 ÷ 10) is attributed to each of the first 10 years.

Example 2 (Paragraph 73): A plan pays CU2,000 to employees still employed at age 55 after 20 years of service, or at age 65 regardless of length of service. For employees joining before age 35, attribute CU100 (CU2,000 ÷ 20) to each year from age 35 to 55.

Example 3 (Paragraph 73): A post-employment medical plan reimburses 40% of medical costs if employee leaves after 10-20 years of service, and 50% if after 20+ years. Attribute 4% (40% ÷ 10) to each of the first 10 years and 1% (10% ÷ 10) to each of the second 10 years.

Example 4 (Paragraph 73): A post-employment medical plan reimburses 10% if employee leaves after 10-20 years, and 50% if after 20+ years. Service in later years leads to materially higher benefit. For employees expected to leave after 20+ years, attribute 2.5% (50% ÷ 20) to each of the first 20 years.

Paragraph 74: Where benefit is a constant proportion of final salary for each year of service, future salary increases affect the amount required to settle the obligation but do not create an additional obligation.

Actuarial Assumptions (Paragraphs 75-98)

Paragraph 75: Actuarial assumptions shall be unbiased and mutually compatible.

Paragraph 76: Actuarial assumptions comprise:

(a) Demographic assumptions:

Mortality

Rates of employee turnover, disability, and early retirement

Proportion of plan members with dependants

Proportion selecting each payment option

Claim rates under medical plans

(b) Financial assumptions:

Discount rate

Benefit levels and future salary

Future medical costs

Taxes payable by the plan

Paragraph 80: Financial assumptions shall be based on market expectations at the end of the reporting period.

Paragraph 83: The discount rate shall be determined by reference to market yields at the end of the reporting period on high quality corporate bonds. For currencies with no deep market in such bonds, use government bonds. The currency and term shall be consistent with the post-employment benefit obligations.

Paragraph 87: Measure defined benefit obligations on a basis that reflects:

Benefits set out in the plan terms

Estimated future salary increases

Any limit on employer's share of cost

Contributions from employees or third parties

Estimated future changes in state benefits (if enacted or reliably predictable)

Paragraph 93: Contributions from employees or third parties set out in formal terms either reduce service cost (if linked to service) or affect remeasurements (if not linked to service).

Past Service Cost and Gains and Losses on Settlement (Paragraphs 99-112)

Paragraph 99: When determining past service cost or gain/loss on settlement, remeasure the net defined benefit liability (asset) using current fair value of plan assets and current actuarial assumptions.

Paragraph 103: Recognise past service cost as an expense at the earlier of:

(a) When the plan amendment or curtailment occurs.

(b) When the entity recognises related restructuring costs or termination benefits.

Paragraph 104: A plan amendment occurs when an entity introduces, withdraws, or changes a defined benefit plan.

Paragraph 105: A curtailment occurs when an entity significantly reduces the number of employees covered by a plan.

Paragraph 109: The gain or loss on a settlement is the difference between:

(a) The present value of the defined benefit obligation being settled.

(b) The settlement price, including any plan assets transferred and payments made.

Paragraph 110: Recognise a gain or loss on settlement when the settlement occurs.

Recognition and Measurement: Plan Assets (Paragraphs 113-119)

Paragraph 113: The fair value of plan assets is deducted from the present value of the defined benefit obligation in determining the deficit or surplus.

Paragraph 114: Plan assets exclude unpaid contributions due from the reporting entity and non-transferable financial instruments issued by the entity.

Paragraph 115: Where plan assets include qualifying insurance policies that exactly match the amount and timing of benefits, the fair value is deemed to be the present value of the related obligations.

Paragraph 116: When it is virtually certain that another party will reimburse some or all of the expenditure:

(a) Recognise the right to reimbursement as a separate asset, measured at fair value.

(b) Disaggregate and recognise changes in fair value in the same way as for plan assets.

Components of Defined Benefit Cost (Paragraphs 120-130)

Paragraph 120: Recognise components of defined benefit cost as follows:

(a) Service cost – in profit or loss

(b) Net interest on the net defined benefit liability (asset) – in profit or loss

(c) Remeasurements – in other comprehensive income

Paragraph 122: Remeasurements recognised in other comprehensive income shall not be reclassified to profit or loss in a subsequent period.

Paragraph 122A: Determine current service cost using actuarial assumptions determined at the start of the annual reporting period.

Paragraph 123: Determine net interest by multiplying the net defined benefit liability (asset) by the discount rate specified in paragraph 83.

Paragraph 123A: Use the net defined benefit liability (asset) and discount rate determined at the start of the annual reporting period.

Presentation (Paragraphs 131-134)

Paragraph 131: Offset an asset relating to one plan against a liability relating to another plan when, and only when:

(a) The entity has a legally enforceable right to use a surplus in one plan to settle obligations under the other plan.

(b) The entity intends either to settle on a net basis or to realise the surplus and settle the obligation simultaneously.

Disclosure (Paragraphs 135-152)

Paragraph 135: Disclose information that:

(a) Explains the characteristics of defined benefit plans and risks.

(b) Identifies and explains amounts in financial statements.

(c) Describes how plans may affect the amount, timing, and uncertainty of future cash flows.

Paragraph 139: Disclose:

(a) Information about plan characteristics (nature of benefits, regulatory framework, governance responsibilities).

(b) Description of risks, focusing on unusual or plan-specific risks.

(c) Description of plan amendments, curtailments, and settlements.

Paragraph 140: Provide a reconciliation from opening to closing balance for:

(a) Net defined benefit liability (asset), showing separate reconciliations for plan assets, present value of defined benefit obligation, and effect of asset ceiling.

(b) Any reimbursement rights.

Paragraph 141: Each reconciliation shall show:

Current service cost

Interest income or expense

Remeasurements (return on plan assets, actuarial gains/losses from demographic and financial assumptions, changes in effect of asset ceiling)

Past service cost and gains/losses from settlements

Effect of foreign exchange changes

Contributions (employer and plan participants)

Payments from the plan

Effects of business combinations and disposals

Paragraph 142: Disaggregate fair value of plan assets into classes distinguishing nature and risks.

Paragraph 144: Disclose significant actuarial assumptions in absolute terms.

Paragraph 145: Disclose:

(a) Sensitivity analysis for each significant actuarial assumption.

(b) Methods and assumptions used in sensitivity analyses.

(c) Changes from previous period.

Paragraph 147: Disclose:

(a) Description of funding arrangements and policy.

(b) Expected contributions for the next annual reporting period.

(c) Maturity profile of the defined benefit obligation, including weighted average duration.

OTHER LONG-TERM EMPLOYEE BENEFITS (Paragraphs 153-158)

Paragraph 153: Include items such as:

Long-term paid absences (long-service or sabbatical leave)

Jubilee or other long-service benefits

Long-term disability benefits

Profit-sharing and bonuses (if not expected to be settled within 12 months)

Deferred remuneration

Recognition and Measurement

Paragraph 155: Apply paragraphs 56-98 and 113-115 for recognising and measuring the surplus or deficit.

Paragraph 156: Recognise the net total of the following in profit or loss:

(a) Service cost

(b) Net interest on the net defined benefit liability (asset)

(c) Remeasurements of the net defined benefit liability (asset)

TERMINATION BENEFITS (Paragraphs 159-171)

Paragraph 159: Termination benefits result from either an entity's decision to terminate employment or an employee's decision to accept an offer of benefits.

Paragraph 160: Termination benefits do not include benefits resulting from termination at the employee's request without an entity's offer, or from mandatory retirement requirements.

Paragraph 165: Recognise a liability and expense for termination benefits at the earlier of:

(a) When the entity can no longer withdraw the offer.

(b) When the entity recognises costs for a restructuring involving termination benefits.

Paragraph 166: For benefits payable as a result of an employee's decision to accept an offer, the entity can no longer withdraw the offer at the earlier of:

(a) When the employee accepts the offer.

(b) When a restriction on the entity's ability to withdraw takes effect.

Paragraph 167: For benefits payable as a result of an entity's decision to terminate employment, the entity can no longer withdraw the offer when a plan of termination meeting all criteria has been communicated:

(a) Actions required indicate unlikely significant changes.

(b) Plan identifies number of employees, job classifications, functions, locations, and expected completion date.

(c) Plan establishes termination benefits in sufficient detail.

Paragraph 169: Measure termination benefits in accordance with the nature of the benefit:

If an enhancement to post-employment benefits, apply post-employment benefit requirements.

If expected to be settled wholly within 12 months, apply short-term employee benefit requirements.

If not expected to be settled within 12 months, apply other long-term employee benefit requirements.

Example (Paragraphs 159-170): An entity plans to close a factory in 10 months. Employees who stay until closure receive CU30,000; those leaving before receive CU10,000. 120 employees; 20 expected to leave before closure.

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Termination benefits: CU10,000 per employee = CU1,200,000 (120 × CU10,000). Recognised at earlier of plan announcement or recognition of restructuring costs.

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Benefits for service: Incremental CU20,000 per employee for 100 employees = CU2,000,000. Recognised as short-term employee benefits over 10 months (CU200,000 per month).

KEY TAKEAWAYS SUMMARY

Category	Recognition	Measurement	Presentation
Short-term employee benefits	When service rendered	Undiscounted amount	Liability/expense
Defined contribution plans	When service rendered	Contribution payable (discounted if >12 months)	Liability/expense
Defined benefit plans	When service rendered	Projected unit credit method; discounted	Net defined benefit liability (asset)
Other long-term employee benefits	When service rendered	Similar to defined benefit but all changes in P/L	Liability/expense
Termination benefits	Earlier of no withdrawal or restructuring recognition	Based on nature (short-term, long-term, or post-employment)	Liability/expense