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Chapter 12

Employee Benefits
PSAK 24

Accounting Department

Faculty of Economics & Business

Universitas Indonesia

Agend
a
1.
2.
3.
4.

Applicable Standard and Scope


Short-term Employee Benefits
Termination Benefits
Post-employment Benefits
4.1 Distinction Between Defined Contribution Plans
and Defined Benefit Plans
4.2 Defined Contribution Plans
4.3 Defined Benefit Plans

5. Other Long-term Employee Benefits

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Intermediate Financial Reporting: An IFRS Perspective 2E- 2

1. Applicable Standard and Scope


PSAK 24 (Revisi 2013): Employee Benefits
prescribes the accounting and disclosure by
employers for employee benefits.
An employer applies PSAK 24 to account for all
employee benefits, except those to which PSAK
53: Share-based Payment applies and PSAK 18:
Akuntansi dan Pelaporan Program Manfaat
Purnakarya.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 3

1. Applicable Standard and Scope

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Intermediate Financial Reporting: An IFRS Perspective 2E- 4

1. Applicable Standard and Scope


Employee benefits are all forms of consideration given by an entity in
exchange for service rendered by employees, and include:
Short-term
Short-termEmployee
EmployeeBenefits
Benefits

such as wage, salaries, paid annual


and sick leave, and bonus

Termination
TerminationBenefits
Benefits

such as severance payments,


payments in lieu of notice

Post-employment
Post-employmentBenefits
Benefits
Other
OtherLong-term
Long-termEmployee
EmployeeBenefits
Benefits

such as pensions and


employment medical care

post-

such as long-service leave and


long-term disability benefits

Each category identified above has different characteristics


PSAK 24 establishes separate requirements for each category.
Comparatively, accounting for short-term employee benefits and termination
benefits is generally more straightforward.
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Intermediate Financial Reporting: An IFRS Perspective 2E- 5

2. Short-term Employee Benefits

Short-term
Short-termEmployee
EmployeeBenefits
Benefits

such as wage, salaries, paid annual


and sick leave, and bonus

Short-term employee benefits are defined as


employee benefits (other than termination benefits) that are
expected to be settled wholly before 12 months after the end of the
annual reporting period in which the employees render the related
service.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 6

2. Short-term Employee Benefits


Recognition and Measurement for Short-term Employee Benefits
Main Requirements for All Short-term Employee Benefits
When an employee has rendered service to an entity during an accounting
period
the entity recognises the undiscounted amount of short-term employee
benefits expected to be paid in exchange for that service:
a) as a liability (accrued expense), after deducting any amount already
paid.
If the amount already paid exceeds the undiscounted amount of the
benefits, an entity recognises that excess as an asset (prepaid
expense) to the extent that the prepayment will lead to, for example, a
reduction in future payments or a cash refund; and
b) as an expense, unless another IFRS requires or permits the inclusion
of the benefits in the cost of an asset (e.g. PSAK 14 and 16).
Requirements further applied to the following short-term employee benefits

Short-term
Short-termPaid
PaidAbsences
Absences
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Profit
ProfitSharing
Sharingand
andBonus
BonusPlans
Plans
Intermediate Financial Reporting: An IFRS Perspective 2E- 7

2. Short-term Employee Benefits


Recognition and Measurement for Short-term Employee Benefits
An entity recognises the expected
cost of short-term employee benefits
in the form of paid absences under
the main requirements as follows:
a) in the case of accumulating paid
absences, when the employees
render service that increases
their entitlement to future paid
absences; and
b) in the case of non-accumulating
paid absences, when the
absences occur

Short-term
Short-termpaid
paidAbsences
Absences
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An entity recognises the expected


cost of profit sharing and bonus
payments
under
the
main
requirements when, and only when:
a) the entity has a present legal or
constructive obligation to make
such payments as a result of
past events; and
b) a reliable estimate of the
obligation can be made.
A present obligation exists when, and
only when, the entity has no realistic
alternative but to make the
payments.
Profit
ProfitSharing
Sharingand
andBonus
BonusPlans
Plans
Intermediate Financial Reporting: An IFRS Perspective 2E- 8

2. Short-term Employee Benefits


Disclosure for Short-term Employee Benefits
PSAK 24 does not require specific disclosures about short-term
employee benefits
But care should be taken that other IFRSs may require disclosures
For example, PSAK 1: Presentation of Financial Statements and PSAK 7:
Related Party Disclosures.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 9

3. Termination Benefits

Short-term Employee Benefits


Termination
TerminationBenefits
Benefits

such as severance payments,


payments in lieu of notice

Termination benefits (Pemutusan Kontrak Kerja) are defined as


employee benefits provided in exchange for the termination of an
employees employment as a result of either:
a) an entitys decision to terminate an employees employment
before the normal retirement date; or
b) an employees decision to accept an offer of benefits in
exchange for the termination of employment.
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Intermediate Financial Reporting: An IFRS Perspective 2E- 10

3. Termination Benefits
Recognition for Termination Benefits
An entity recognises termination benefits as
a liability and
an expense
at the earlier of the following dates:
a) when the entity can no longer withdraw the offer of those benefits;
and
b) when the entity recognizes costs for a restructuring that is within the
scope of PSAK 57 and involves the payment of termination benefits.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 11

3. Termination Benefits
Recognition for Termination Benefits
when the entity can no longer
withdraw the offer of those
benefits:
For cases where an employee
accepts an offer of benefits in
This
Thisisisthe
theearlier
earlierof:
of:
exchange for the termination of
a)
a) when
when the
the employee
employee accepts
accepts the
the
employment
offer;
offer;and
and
For cases where an entity
b)
b)when
when aa restriction
restriction (e.g.
(e.g. aa legal,
legal,
decides
to
terminate
an
regulatory
or
contractual
regulatory
or
contractual
employees employment.
requirement
requirement or
or other
other restriction)
restriction)
on
on the
the entitys
entitys ability
ability to
to
withdraw
withdrawthe
theoffer
offertakes
takeseffect.
effect.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 12

3. Termination Benefits
Recognition for Termination Benefits
when the entity can no longer
withdraw the offer of those benefits:
For cases where an employee
accepts an offer of benefits in
exchange for the termination of
employment
For cases where an entity
decides
to
terminate
an

This
This is
is when
when the
the entity
entity has
has
employees employment.
communicated
communicated to
to the
the affected
affected
employees
employees aa plan
plan of
of termination
termination
meeting
meeting all
all of
of the
the criteria
criteria as
as per
per
next
nextslide.
slide.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 13

3. Termination Benefits
Recognition for Termination Benefits
This is when the entity has communicated to the affected employees
a plan of termination meeting all of the following criteria:
Actions required to complete the plan indicate that it is unlikely
that significant changes to the plan will be made
The plan identifies the number of employees whose employment
is to be terminated, their job classifications or functions and their
locations and the expected completion date
The plan establishes the termination benefits that employees will
receive in sufficient detail that employees can determine the type
and amount of benefits they will receive when their employment is
terminated.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 14

3. Termination Benefits
Measurement for Termination Benefits
If termination benefits are expected to be settled wholly before 12
months after the end of the annual reporting period in which the
termination benefit is recognised, the entity applies the requirements for
short-term employee benefits.
If the termination benefits are not expected to be settled wholly before
12 months after the end of the annual reporting period, the entity
applies the requirements for other long-term employee benefit.
If the termination benefits are an enhancement to post-employment
benefits, an entity applies the requirements for post-employment
benefits.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 15

4. Post-employment Benefits

Short-term Employee Benefits


Termination Benefits
Post-employment
Post-employmentBenefits
Benefits

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such as pensions and postemployment medical care

Intermediate Financial Reporting: An IFRS Perspective 2E- 16

4. Post-employment Benefits
Post-employment benefits
are employee benefits (other than termination benefits and shortterm employee benefits) that are payable after the completion of
employment
Post-employment benefit plans
are formal or informal arrangements under which an entity provides
post-employment benefits for one or more employees
are classified as either

Defined
Defined Contribution
Contribution Plans
Plans or

Defined
Defined Benefit
Benefit Plans
Plans

depending on the economic substance of the plan as derived


from its principal terms and conditions

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Intermediate Financial Reporting: An IFRS Perspective 2E- 17

4.1 Distinction Between Defined Contribution


Plans and Defined Benefit Plans

Employer

Contribution

Defined
Contribution
Plan

Defined

Pension Fund

Benefit

Employee

Undefined
Employers
Risk

Defined
Benefit Plan

Undefined

Defined
Employers
Risk

Accounting Department

Faculty of Economics & Business

Universitas Indonesia

4.1 Distinction Between Defined Contribution


Plans and Defined Benefit Plans
Table 12.1
Defined contribution plan

Defined benefit plans

Entity's obligation

Provide agreed
contribution

Provide agreed
benefits

Actuarial risk

Fall on the employee

Fall on the employer

Investment risk

Fall on the employee

Fall on the employer

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Intermediate Financial Reporting: An IFRS Perspective 2E- 19

4.1 Defined Contribution Plans and Defined Benefit


Plans in Indonesia

Defined contribution plan

Defined benefit plans

Regulation

UU No. 24 Tahun 2011


Badan Penyelenggara
Jaminan Sosial (BPJS)

UU No.13 Tahun 2003


Ketenagakerjaan

Example

Contribution:
Jaminan Hari Tua: 5,7% of
monthly salary.
Jaminan Kematian: 0,3% of
monthly salary

Benefit:
Ketika Pensiun: 2
Pesangon + 1
Penghargaan Masa
Kerja (PMK) +
UangPenggantian Hak
(UPH) sebesar 15%

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Intermediate Financial Reporting: An IFRS Perspective 2E- 20

Pension Fund

Accounting Department

Faculty of Economics & Business

Universitas Indonesia

NATURE OF PENSION PLANS


Defined Contribution Plan

Employer contribution
determined by plan (fixed)

Risk borne by employees

Benefits based on plan value

Defined Benefit Plan

Benefit determined by plan

Employer contribution varies


(determined by Actuaries)

Risk borne by employer

Companies engage actuaries to ensure that a pension plan is


appropriate for the employee group covered.

LO 2
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Intermediate Financial Reporting: An IFRS Perspective 2E- 22

4.2 Defined Contribution Plans


Defined contribution plans
are post-employment benefit plans under which an entity
pays fixed contributions into a separate entity (a fund)
and
will have no legal or constructive obligation to pay further
contributions if the fund does not hold sufficient assets to
pay all employee benefits relating to employee service in
the current and prior periods

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Intermediate Financial Reporting: An IFRS Perspective 2E- 23

4.2 Defined Contribution Plans


When an employee has rendered service to an entity during a period,
the entity recognises the contribution payable to a defined contribution
plan in exchange for that service:
a) as a liability (accrued expense), after deducting any contribution
already paid.
If the contribution already paid exceeds the contribution due for
service before the balance sheet date, an entity recognises that
excess as an asset (prepaid expense) to the extent that the
prepayment will lead to, for example, a reduction in future payments
or a cash refund; and
b) as an expense,
unless another IFRS requires or permits the inclusion of the
contribution in the cost of an asset (see, for example, PSAK 4 & 16)

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Intermediate Financial Reporting: An IFRS Perspective 2E- 24

4.2 Defined Contribution Plans


Where contributions to a defined contribution plan
are not expected to be settled wholly before 12
months after the end of the annual reporting period
in which the employees render the related service, they
are discounted using the discount rate specified in
IAS 19
An entity discloses the amount recognised as an
expense for defined contribution plans

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Intermediate Financial Reporting: An IFRS Perspective 2E- 25

4.3 Defined Benefit Plans


Defined benefit plans
are post-employment benefit plans other than defined
contribution plans.
Accounting for defined benefit plans
is complex
because actuarial assumptions are required to measure
the obligation and the expense and there is a possibility
of actuarial gains and losses.
The obligations are measured on a discounted basis
because they may be settled many years after the
employees render the related service.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 26

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement
Defined benefit plans may be:
a) unfunded, or
b) wholly or partly funded

by contributions by an entity, and sometimes its employees, into an


entity, or fund

that is legally separate from the reporting entity and from which the
employee
benefits
are
paid

A funded defined benefit plan will create both


Measured at
Defined
Defined Benefit
Benefit Obligation
Obligation
Plan
Plan Assets
Assets
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Present Value
Fair Value
Intermediate Financial Reporting: An IFRS Perspective 2E- 27

Reporting Changes in Obligation (Asset)


ILLUSTRATION 20-5
Reporting Changes in the Pension Obligation (Assets)

Three Components
of Pension Costs

LO 4
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Intermediate Financial Reporting: An IFRS Perspective 2E- 28

Reporting Changes in Obligation (Asset)


1.

Component of
Pension Expense

Service Cost

Current service cost - increase in the present value of the


defined benefit obligation from employee service in the current
period.

Past service cost - change in the present value of the defined


benefit obligation for employee service for prior periods
generally resulting from a plan amendment.

Reported in the statement of income in the operating section of


the statement and affects net income.

Determine pension expense based on future salary levels.

Assign benefits to period of service.


LO 4

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Intermediate Financial Reporting: An IFRS Perspective 2E- 29

Reporting Changes in Obligation (Asset)


2.

Net Interest

Component of
Pension Expense

Computed by multiplying the discount rate by the funded status


of the plan (defined benefit obligation minus plan assets).

Net defined benefit obligation results in interest expense.

Net defined benefit asset results in interest revenue.

Amount is often shown below the operating section of the


income statement in the financing section.

Discount rate is based on the yields of high-quality bonds with


terms consistent with the companys pension obligation.

LO 4
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Intermediate Financial Reporting: An IFRS Perspective 2E- 30

Reporting Changes in Obligation (Asset)


3.

Remeasurements

Gains and losses related to the defined benefit obligation.

Gains or losses on the fair value of the plan assets.

This component is reported in other comprehensive income, net


of tax.

Remeasurement gains or losses therefore affect comprehensive


income but not net income.

LO 4
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Intermediate Financial Reporting: An IFRS Perspective 2E- 31

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement
Examples of Factors
Service cost
Current service cost
Past service cost
Gain or loss on
settlements
Interest expense
Remeasurements including
actuarial gains and losses

Interest income
Remeasurements including
actuarial gains and losses
Contribution or withdrawal

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Affect
Affect

Affect
Affect

Defined
Defined Benefit
Benefit Obligation
Obligation

Plan
Plan Assets
Assets

Intermediate Financial Reporting: An IFRS Perspective 2E- 32

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement

Recognition in the Balance Sheet


The amount recognised as net defined benefit
liability (asset) is the deficit or surplus,

adjusted for any effect of limiting a net defined


benefit asset to the asset ceiling.

The deficit or surplus is:


a) the present value of the defined benefit
Defined
obligation at the B/S date
Defined Benefit
Benefit Obligation
Obligation
b) less

the fair value at the B/S date of


plan assets (if any)

Plan
Plan Assets
Assets

The asset ceiling is the present value of any


economic benefits available in the form of
refunds from the plan or reductions in future
contributions to the plan. (ISAK 15)
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Intermediate Financial Reporting: An IFRS Perspective 2E- 33

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement

Recognition in the Balance Sheet

When an entity has a surplus in a defined benefit plan, the net


defined benefit asset is measured at the lower of:
a) the surplus in the defined benefit plan; and
b) the asset ceiling, determined using the discount rate method.

Overfunding a defined benefit plan or having actuarial gains may give


rise to a net defined benefit asset that should be recognized by the
entity

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Intermediate Financial Reporting: An IFRS Perspective 2E- 34

4.3 Defined Benefit Plans


Actual return on plan asset = 100

Beginning
Plan asset
700
Beginning
Net liability
300

Discount
rate 5%
Net
interest 15

Remeasurement
65
Interest
income
35
Interest cost
50

Interest
expense
Ending DBO=1100

Accounting Department

DBO from actuarial=1150

Faculty of Economics & Business

Remeasurement
OCI = 50

Beginning
Defined
benefit
obligation
(DBO)
1000

Other
Comprehensive
Income

Universitas Indonesia

4.3 Defined Benefit Plans


Recognition
Recognitionand
andMeasurement
Measurement

Example
Example 12.5
12.5

Company A has a defined benefit plan for its employees and the information on
the components of the defined benefit cost for the current annual reporting
period are set out below:
($000)
Present value of the defined benefit obligation, opening balance
Interest expense
Fair value of plan asset, opening balance
Service cost
Return on plan assets:
Interest income
35
Others
15
Actuarial gains

1,000
50
700
40

50
20

Required:
Determine the opening and closing balances of the net defined benefit
liability (asset) in the balance sheet of company A.
Determine the expense recognised in profit/loss.
Nelson Lam and Peter Lau

Intermediate Financial Reporting: An IFRS Perspective 2E- 36

4.3 Defined Benefit Plans


Answer
Answer (a)
(a)
Net defined benefit liability, opening balance:
Present value of defined benefit obligation
Less: Fair value of plan assets
300

Net defined benefit liability, closing balance:


Net defined benefit obligation, opening balance
Service cost
Interest cost
Remeasurements: Actuarial Gain
Fair Value of Plan Assets, closing balance:
Fair Value of Plan Assets, opening
Interest income
Remeasurements:
Nelson Lam and Peter Lau

1,000
700

1,000
40
50
(20)
1,070
700
35
15
750

Liability

320

Intermediate Financial Reporting: An IFRS Perspective 2E- 37

4.3 Defined Benefit Plans


Answer
Answer (b)
(b)
Net defined benefit liability, opening balance:
Present value of defined benefit obligation
Less: Fair value of plan assets
300

Net defined benefit liability, closing balance:


Net defined benefit obligation, opening balance
Service cost
Interest cost
Remeasurements: Actuarial Gain
Fair Value of Plan Assets, closing balance:
Fair Value of Plan Assets, opening
Interest income
Remeasurements:
Nelson Lam and Peter Lau

1,000
700

1,000
40
50
(20)
1,070

Profit
/Loss

55

700
35
15
750

Intermediate Financial Reporting: An IFRS Perspective 2E- 38

4.3 Defined Benefit Plans


Recognition in the Income Statement

Net interest = interest expense interest income or


discount rate x net defined benefit liability or asset.

Net interest is determined using the discount rate at the beginning of


the period.

Example:
Opening balance of defined benefit obligation

: 1.000

Opening balance of plan assets

Discount rate

: 10%

Interest expense = 10% x 1.000 = 100

Interest income = 10% x

Net interest = 100 90 = 10

Net interest = 10% x (1.000 - 900) = 10

Nelson Lam and Peter Lau

900 = 90
or

900

both
both should
should be
be recognized
recognized in
in
profit
profit or
or loss,
loss, the
the actual
actual results
results
are
are recognized
recognized as
as aa
remeasurement.
remeasurement.

Intermediate Financial Reporting: An IFRS Perspective 2E- 39

4.3 Defined Benefit Plans


Using
Using Worksheet
Worksheet

Accounting Department

Faculty of Economics & Business

Universitas Indonesia

4.3 Defined Benefit Plans


Using
Using Worksheet
Worksheet
Begining Balance
Present value of defined benefit obligation
Fair value of plan assets

:1.000
: 700

-300

Accounting Department

-1.000

Faculty of Economics & Business

700

Universitas Indonesia

4.3 Defined Benefit Plans


Using
Using Worksheet
Worksheet

Service Cost
Interest Cost
Interest Income
Contribution
Benefit
Actual return of plan assets
Actuarial Gain

:
:
:
:
:
:
:

40
50
-35

55

40
50
35
0
0
15
20

Expenses

-300

55
Cash
0
Liability
20
OCI
35

-1.000
-40
-50

-0

-0

Accounting Department

-20
-15
-35
-35

0
20
-20
-320

700

35
0
-0
15

-1.070

Faculty of Economics & Business

750

Universitas Indonesia

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement

PV of Obligation and Current Service Cost


Actuarial valuation method
An entity uses the Projected Unit Credit Method to determine
the present value of its defined benefit obligations and
the related current service cost and,
where applicable, past service cost
Projected Unit Credit Method is an actuarial valuation method that sees
each period of service as giving rise to an additional unit of benefit
entitlement and measures each unit separately to build up the final
obligation (sometimes known as the accrued benefit method pro-rated
on service or as the benefit/years of service method).
This method only calculate the services that have been granted but
already consider the projected salary (accrual concept).
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Intermediate Financial Reporting: An IFRS Perspective 2E- 43

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement

PV of Obligation and Current Service Cost


Actuarial assumptions comprises
demographic
demographicassumptions
assumptions
financial
financialassumptions
assumptions

- such as mortality and rates of employee


turnover, disability and early retirement
- such as the discount rate and future
salary and benefit levels

The rate used to discount post-employment benefit obligations is


determined by reference to market yields at the B/S date on
high quality corporate bonds.
government bonds (if in countries where there is no deep market in
such bonds)
the currency and term of the corporate or government bonds
should be consistent with the currency and estimated term of the
post-employment benefit obligations.
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Intermediate Financial Reporting: An IFRS Perspective 2E- 44

4.3 Defined Benefit Plans


Past Service Cost

Change in the present value of the defined benefit obligation


resulting from a plan amendment or a curtailment.

Expense past service cost in the period of the amendment


or curtailment.
ILLUSTRATION 20-12
Types of Past Service Costs

LO 6
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Intermediate Financial Reporting: An IFRS Perspective 2E- 45

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement

Past Services Cost and Gains and Losses on Settlement


An entity remeasures the net defined benefit liability (asset) using

the current fair value of plan assets and

current actuarial assumptions reflecting the benefits offered under the


plan

before the plan amendment, curtailment or settlement.


If a plan amendment occurs before a settlement, an entity recognises
past service cost before any gain or loss on settlement

or

A settlement occurs together with a plan amendment and curtailment if


the plan ceases to exist and the defined benefit obligation is settled.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 46

4.3 Defined Benefit Plans


Recognition
Recognition and
and Measurement
Measurement

Past Services Cost and Gains and Losses on Settlement


An entity recognizes past service cost as an expense at the
earlier of the following dates:
when the plan amendment or curtailment occurs; and
when the entity recognises related restructuring costs
(see PSAK 57) or termination benefits

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Intermediate Financial Reporting: An IFRS Perspective 2E- 47

4.3 Defined Benefit Plans


Component
Component Costs
Costs

Components of Defined Benefit Cost


Under the Net Interest Approach, the change in the net
defined benefit liability or asset is disaggregated into
service cost in profit or loss;
net interest on the net defined benefit liability (asset) in
profit or loss; and
remeasurements of the net defined benefit liability
(asset) in other comprehensive income.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 48

4.3 Defined Benefit Plans


Component
Component Costs
Costs

Components of Defined Benefit Cost


Net interest on the net defined benefit liability (asset)
comprises:
interest income on plan assets;
interest expense on the defined benefit obligation; and
interest on the effect of the asset ceiling.

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Intermediate Financial Reporting: An IFRS Perspective 2E- 49

4.3 Defined Benefit Plans


Beginning Balance
Present Value Defined Benefit Obligation
Fair Value of Plan Assets :
138.300
Actuarial Gain (OCI)
:
7.090
Past Service Cost
:
60.000

Comprehensive
ComprehensiveExample
Example
:

60.000
60.000

Accounting Department

139.750

-7.090

-1.450

-7.090

-1.450

-139.750
-60.000
-199.750

Faculty of Economics & Business

138.300
138.300

Universitas Indonesia

4.3 Defined Benefit Plans


Comprehensive
ComprehensiveExample
Example

Current Year Information:


Service Cost
Discount rate
Contribution
Benefit

:
:
:
:

60.000
60.000
16.000
17.977
-12.447

16.000
9%
30.000
11.000

-7.090

-1.450

-7.090

-1.450

-139.750
-60.000
-199.750
-16.000
-17.977

-30.000
11.000

Accounting Department

Faculty of Economics & Business

138.300
138.300

12.447
30.000
-11.000

Universitas Indonesia

4.3 Defined Benefit Plans


Comprehensive
ComprehensiveExample
Example

End of Year Information:


PV DBO (actuarial)
:
FV Plan Assets
:

Expense

225.000
175.000

60.000
60.000
16.000
17.977
-12.447

-7.090

-1.450

-7.090

-1.450

81.530
Cash
30.000
Liability
48.550
OCI
2.980
-139.750
-60.000
-199.750
-16.000
-17.977

-30.000

81.530

-30.000

2.273
-5.253
-2.980
-10,070

Accounting Department

11.000
-2.273

138.300
138.300

12.447
30.000
-11.000
5.253

-48.550
-50.000

-225.000

Faculty of Economics & Business

175.000

Universitas Indonesia

4.3 Defined Benefit Plans


Presentation
Presentation

Offset

An entity offsets an asset relating to one plan against a liability relating to


another plan when, and only when, the entity:
a) has a legally enforceable right to use a surplus in one plan to
settle obligations under the other plan; and
b) intends either to settle the obligations on a net basis, or to realise
the surplus in one plan and settle its obligation under the other
plan simultaneously.

Current/Non-current Distinction
PSAK 24 does not specify whether an entity is required to distinguish
current and non-current portions of assets and liabilities arising from
post-employment benefits.

Financial Components of Post-employment Benefit Costs


PSAK 24 does not specify how an entity should present service cost and
net interest on the net defined benefit liability (asset). An entity presents
those components in accordance with PSAK 1.
Nelson Lam and Peter Lau

Intermediate Financial Reporting: An IFRS Perspective 2E- 53

5. Other Long-term Employee Benefits

Short-term Employee Benefits


Termination Benefits
Post-employment Benefits
Other
OtherLong-term
Long-termEmployee
EmployeeBenefits
Benefits

such as long-service leave and


long-term disability benefits

Other Long-term Employee Benefits are defined as


employee benefits other than short-term employee benefits, postemployment benefits and termination benefits
Nelson Lam and Peter Lau

Intermediate Financial Reporting: An IFRS Perspective 2E- 54

5. Other Long-term Employee Benefits


Recognition for Other Long-term Employee Benefits

An entity recognises the net total of the following amounts in profit


or loss, except to the extent that another IFRS requires or permits
their inclusion in the cost of an asset:
a) service cost;
b) net interest on the net defined benefit liability (asset); and
c) remeasurements of the net defined benefit liability (asset)

In measuring the liability, an entity applies the requirements similar to


the requirements for post-employment benefits.

Nelson Lam and Peter Lau

Intermediate Financial Reporting: An IFRS Perspective 2E- 55

5.Other Postretirement Benefits

ILLUSTRATION 20-27
Differences between Pensions and
Postretirement Healthcare Benefits

LO 9
Nelson Lam and Peter Lau

Intermediate Financial Reporting: An IFRS Perspective 2E- 56

Sources
Lam & Lau (2011): Intermediate Financial
Reporting: An IFRS Perspective
PSAK 24 (Revisi 2013): Imbalan Kerja
Dwi Martani et al (2015): Akuntansi Keuangan
Menengah: Berbasis PSAK (Buku 2)

Accounting Department

Faculty of Economics & Business

Universitas Indonesia