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Exam 13: Accounting for Employee Benefits

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Question 1

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Which of the following is ?not considered compensated absences under AASB 119 "Employee Benefits"?

A) Sick leave
B) Annual leave
C) Long service leave
D) Sabbatical leave
E) None of the given answers

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Question 2

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Employee benefits include:

A) Wages and salaries, sick leave, payroll tax, annual leave.
B) Superannuation, wages and salaries, sick leave and annual leave.
C) Sick leave, annual leave, unemployment benefits, salaries and wages.
D) Annual leave, wages and salaries, post-employment benefits, payroll tax.
E) None of the given answers.

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Question 3

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AASB 119 "Employee Benefits" prescribes that all obligations relating to wages and salaries,annual leave and sick-leave entitlements,regardless of whether they were expected to be settled within 12 months of the reporting date be measured at nominal (undiscounted)amounts.

Entity A contributes to a defined benefit superannuation plan for its employees.It calculates the following: Current service cost 12,785 Interest cost 983 Expected return on plan assets (1,150) Net actuarial gain recognised in period (1,835) 10,783 The $10,783 represents:

What discount rate does AASB 119 require to be used to discount estimated future cash outflows associated with the relevant employee entitlements?

Any employee benefits that have been earned but not paid as at the reporting date are assets of the employer:

A non-contributory superannuation fund means:

Annette French joined Paris Ltd on 1 July 2011 as a bookkeeper.She is the only permanent employee of Paris Ltd.On 30 June 2012 her salary was $35,000.Annette French's salary is expected to increase with inflation at a rate of 3%.Paris Ltd provides long service leave entitlement of 13 weeks after 15 years of service.A pro rata payment is made after 10 years of service.The probability of Annette French staying in the job until the obligation vests is 35%. Other information: What is the long service leave liability (to the nearest $) of Paris Ltd as at 30 June 2012?

Mackay Ltd provides defined superannuation benefits to two (2) of its employees which represents an entitlement of three times their final salary on retirement.The following details are relevant to the current superannuation obligation of the company for the two employees for the years ended 30 June 2011 and 2012: In accordance with AASB 119 "Employee Benefits",what is the interest cost and actuarial gain (loss) for the defined benefit obligation for the year ending 2012?

Defined benefit plans are fairly simplistic and AASB 119 devotes only a small section to them:

Any employee benefit that is incurred by the employer during the period and that contributes to the generation of items expected to provide future economic benefits for the employer may be capitalised as an asset:

The causes of actuarial gains and losses when accounting for defined benefit superannuation plans includes:

Trailers of the World has a small group of four employees.Trailers take part in a defined contribution plan and pay the required government contribution of 9 per cent plus an additional 4 per cent to reward its employees.Based on the employee earnings below,what is Trailers' superannuation obligation for the year?

When determining accounting entries to be made in relation to the defined benefit liability of an entity,AASB 119 "Employee Benefits" requires actuarial gains and losses to be recognised as part of the income or expense of the period.

A defined contribution scheme:

Junior Ltd employs three workers to develop and test games.The employees are currently earning $30,000 each and are expected to cease their employment in 20 years.At the end of their employment each employee is entitled to a lump sum payment equal to 10 per cent of their final salary.Actuarial analysis suggests salaries will increase evenly at a rate of 5 per cent per year over the 20 years.At the end of the 20 years Junior's undiscounted obligation is $477,593.Assuming an interest rate of 8 per cent,calculate the obligation that would be recorded at the end of year 1 (rounded to the nearest dollar) :

Danish Ltd has an average weekly payroll of $200,000.The employees are entitled to 2 weeks',non-vesting sick leave per annum.Past experience suggests that 56 per cent of employees will take the full 2 weeks' sick leave and 22 per cent will take 1 week's leave each year.The rest of the employees take no sick leave.In the current week an employee with a weekly salary of $600 has been off sick for the first time this year.The employee took 2 days off out of her normal 5-day working week.Assuming that a weekly entry has been made to record the accumulated liability for sick leave and that PAYG tax is deducted at 30 per cent,what would the entry be to record the employee's weekly salary (round amounts to the nearest dollar) ?

Which of the following is not a step in accounting for contributions to a defined benefit superannuation plan?

In Australia,employee entitlements are protected in the case of company insolvency because:

When employees finish their time with their employer,it is normal practice to pay them for any annual leave earned but not taken: