Accounting for Post-Employment Benefits in IFRS

Very Hard Employee Compensation Post-employment Benefits

XYZ Corporation has a defined benefit pension plan that provides retirement benefits based on an employee's years of service and final salary. During the current fiscal year, the company has recognized a significant increase in the projected benefit obligation (PBO) due to changes in actuarial assumptions associated with life expectancy and interest rates. Additionally, the company decided to offer early retirement incentives to employees aged 55 and above, further impacting the plan's funding.

As the CFO of XYZ Corporation, you are preparing the financial statements for the year. You need to ensure that the expense recognized in the income statement accurately reflects the costs associated with the pension obligations. What should be considered when accounting for the post-employment benefit plan according to IFRS?

The recognized expense must only incorporate the current service cost and interest cost on the defined benefit obligation.

The actuarial gains and losses from the change in assumptions can be recognized in other comprehensive income (OCI) without affecting net income.

The early retirement incentives should be treated as part of the service cost for the current year and not reclassified in subsequent periods.

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