Accounting Treatment of Post-Employment Benefits

Hard Employee Compensation Post-employment Benefits

Company XYZ offers a defined benefit pension plan for its employees, which provides retirement benefits based on an employee's final salary and years of service. In accordance with IFRS, the company is required to recognize the net defined benefit liability on its balance sheet. Additionally, during the current accounting year, the company experienced significant actuarial gains due to changes in financial assumptions affecting the plan’s obligation.

Which of the following statements about the accounting treatment of post-employment benefits is correct?

Actuarial gains can be recognized in profit or loss immediately as they occur.

Actuarial gains may be deferred and recognized in other comprehensive income, not affecting profit or loss directly.

The defined benefit obligation must be measured at fair value, regardless of the underlying assumptions used.

Hint

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