Question 1

Until the release of the first accounting standards on employee entitlements, it was common for entities to fail to accrue employee entitlements such as long service leave:

Accepted Answer

Before the release of accounting standards on employee entitlements, it was not mandatory for entities to accrue employee entitlements such as long service leave, resulting in regular failure to do so.

Question 2

If there is no deep market for high quality corporate bonds, AASB 119 "Employee Benefits" permits the use of market yields on government bonds as a discount rate to determine the present value of a defined benefit obligation.

Accepted Answer

AASB 119 permits the use of market yields on government bonds as a discount rate if there is no deep market for high quality corporate bonds.

Question 3

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

Accepted Answer

When employees leave their job, they are generally entitled to be paid for any accrued but unused annual leave.

Question 4

There are no accounting requirements relating to how superannuation plans should account for the plan's assets, liabilities, expenses and revenues:

Accepted Answer

Accounting standards such as AASB 1056 and AASB 119 provide guidance on how superannuation plans should account for their assets, liabilities, expenses and revenues. Therefore, there are accounting requirements relating to superannuation plans.

Question 5

Employees generally receive superannuation entitlements as part of their employment agreements. Thus usually involves the employer transferring funds to an independent superannuation fund that is administered by an independent trustee:

Accepted Answer

Employees do generally receive superannuation entitlements as part of their employment agreements, and this usually involves the employer transferring funds to an independent superannuation fund that is administered by an independent trustee.

Question 6

In relation to required disclosures, AASB 119 requires an entity to disclose the amount recognised as an expense for defined contribution plans:

Accepted Answer

AASB 119 requires an entity to disclose the amount recognised as an expense for defined contribution plans in the notes to the financial statements.

Question 7

In a long service leave liability, conditional period is period during which an employee gains legal entitlement to pro rata payment.

Accepted Answer

The answer of In a long service leave liability, conditional...

Question 8

Long service leave must be accrued and a liability recorded from the first day of employment:

Accepted Answer

The answer of Long service leave must be accrued and...

Question 9

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

Accepted Answer

While defined benefit plans may seem straightforward, they can be quite complex and AASB 119 (the accounting standard for employee benefits) dedicates several sections to them.

Question 10

In a long service leave liability to an employee, a conditional period refers to the period where no legal entitlement to any cash payment or leave exists.

Accepted Answer

The answer of In a long service leave liability to...

Question 11

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:

Accepted Answer

This statement is true. Examples of such benefits may include employee training, health insurance, and pension contributions. However, it is important to note that not all employee benefits can be capitalised as assets and are subject to specific accounting standards and guidelines.

Question 12

AASB 119 defines employees as 'natural persons (including a director) appointed or engaged under a contract for services who is subject to the directions of an employer in respect of the manner of execution of those services, whether on a full-time, part-time, permanent, casual or temporary basis':

Accepted Answer

AASB 119 does not define employees in this manner; it pertains to employee benefits and outlines the accounting for such, without providing a detailed definition of employees focusing on the nature of their contract or employment status.

Question 13

The creation of cash reserves through accounting provisions ensures employees can be paid their entitlements as they fall due:

Accepted Answer

The answer of The creation of cash reserves through accounting...

Question 14

The general philosophy behind offering shares to employees is that it makes them wealthier:

Accepted Answer

The general philosophy is that offering shares to employees aligns their interests with the company's success, potentially increasing motivation and loyalty, rather than directly making them wealthier.

Question 15

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.

Accepted Answer

AASB 119 requires short-term employee benefits, like wages, salaries, and accumulating sick and annual leave expected to be settled within 12 months, to be measured at their undiscounted amount. However, long-term benefits or those not expected to be settled within 12 months should be measured at their present value, which involves discounting.

Question 16

Employee benefits include:

Accepted Answer

Employee benefits typically include superannuation (retirement savings), wages and salaries, sick leave, and annual leave. Payroll tax and unemployment benefits are not typically considered part of employee benefits. Post-employment benefits (such as pensions) may be provided by some employers, but are not universally offered.

Question 17

Non-vesting sick leave that has accumulated will be paid to employees when their employment ceases:

Accepted Answer

Non-vesting sick leave typically does not accumulate for payout upon termination of employment; it is a use-it-or-lose-it benefit within the period it is granted for.

Question 18

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

Accepted Answer

Employee benefits that have been earned but not paid as at the reporting date are liabilities of the employer, as they represent an obligation to pay employees for services rendered.

Question 19

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.

Accepted Answer

AASB 119 requires actuarial gains and losses to be recognised as part of the income or expense of the period.

Question 20

In a defined contribution plan, the employer effectively bears the risks associated with the movements in the value of the superannuation plan set up for its employees.

Accepted Answer

In a defined contribution plan, the employee bears the risks associated with the movements in the value of the superannuation plan set up for them, not the employer.

Quiz 13: Accounting for Employee Benefits