MASB 29, Employee Benefits

MASB 29, Employee Benefits prescribes the accounting and disclosure by employers for all employee benefits. MASB 29 supersedes MASB Approved Accounting Standard IAS 19, Accounting for Retirement Benefits in the Financial Statements of Employers.

1.Unlike IAS 19 which deals primarily with retirement benefits, MASB 29 covers 5 categories of employee benefits including termination and equity compensation bfenefits.
2.Short-term employee benefits is fairly straight forward i.e. such benefits are recognised when an employee has rendered service in exchange for those benefits.
3.Post-employment benefits are classified as either defined contribution plans or defined benefit plans. Specific guidance is given on the classification of multi-employer plans, state plans and plans with insured benefits.
4.For defined contribution plans, MASB 29 requires an enterprise to recognise contributions to a defined contribution plan when an employee has rendered service in exchange for those contributions.
5.For defined benefit plans may be funded or unfunded. MASB 29 requires an enterprise to:
(a)account not only for its legal obligation, but also for any constructive obligation that arises from the enterprise's practices;
(b)determine the present value of defined benefit obligations and the fair value of any plan assets with sufficient regularity that the amounts recognised do not differ materially from the amounts that would be determined at the balance sheet date;
(c)use the Projected Unit Credit Method to measure its obligations and costs;
(d)attribute benefit to periods of service under the plan's benefit formula, unless an employee's service in later years will lead to a higher level of benefit than in earlier years;
(e)use unbiased and mutually compatible actuarial assumptions about demographic and financial variables;
(f)determine the discount rate by reference to market yields at the balance sheet date on high quality corporate bonds of a currency and term consistent with the currency and term of the post-employment benefit obligations;
(g)deduct the fair value of any plan assets from the carrying amount of the obligation;
(h)limit the carrying amount of an asset so that it does not exceed the net total of any unrecognised past service cost and actuarial losses; plus the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan;
(i)recognise past service cost on a straight line basis over the average period until the amended benefits become vested;
(j)recognise gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs;
(k)recognise a specified portion of the net cumulative actuarial gains and losses according to specified parameters. Systematic methods of faster recognition are permitted provided that the same basis is applied to both gains and losses and the basis is applied consistently from period to period. Such permitted methods include immediate recognition of all actuarial gains and losses.
6.MASB 29 requires a simpler method of accounting for other long term employee benefits than for post-employment benefits: actuarial gains and losses and past service cost are recognised immediately.
7.An enterprise should recognise termination benefits when, and only when, the enterprise is demonstrably committed to either:
(a)terminate the employment of an employee or group of employees before the normal retirement date; or
(b)provide termination benefits as a result of an offer made in order to encourage voluntary redundancy.
8.Where termination benefits fall due more than 12 months after the balance sheet date, they should be discounted.
9.MASB 29 only requires certain disclosures about equity compensation benefits but does not specify their recognition and measurement requirements.

Effective Date: 1 January 2003

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