10-15-2003, 02:01 PM
Hello guys....
I have a case where I'd like to get everyone's opinion on.
A company provides long-term service rewards, whereby after completion of 5 years of service (resignation/retirement need not occur) an employee is rewarded 5 times his/her salary. And it goes on for every 5 years of service completed. Let's say, my employee has completed his/her 2nd year of employment.
My question is, under IAS19, how should we calculate the costs/liability?
- Should we calculate the PV of the benefits due in 3 years' time only? This implies that the costs/liability for service beyond the first 5 years will be calculated starting from the 6th year of service.
OR
- Should we now take into account the benefits for services beyond the first 5 years, that is, we also calculate the liability for leng service rewards for the 10th year, 15 year, etc....
Your comments will be greatly appreciated...
Thanks,
M