Discretionary investment by employee of cash bonus into shares with discretionary matching award by employer On 1 January 2013 an employee is told that he is to participate in a bonus scheme which will pay £1,000 if certain performance criteria are met for the year ended 31 December 2013. The bonus will be paid on 1 January 2014. 50% will be paid in cash and […]

Award with rights to receive (and retain) dividends during vesting period An entity grants 100 free shares to each of its 500 employees. The shares are treated as fully vested for legal and tax purposes, so that the employees are eligible to receive any dividends paid. However, the shares will be forfeited if the employee leaves within three years of the award being made. Accordingly, […]

The projected unit credit method A lump sum benefit is payable on termination of service and equal to 1% of final salary for each year of service. The salary in year 1 is 10,000 and is assumed to increase at 7% (compound) each year. The discount rate used is 10% per year. The following table shows how the obligation builds up for an employee who […]

Replacement award requiring no post-combination service replacing vested acquiree award Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.1 million for awards of Entity B with a fair value at the acquisition date of €1.0 million. No post-combination services are required for the replacement awards and Entity B’s employees had rendered all of the required […]

Attributing benefits to years of service 1. A defined benefit plan provides a lump-sum benefit of 100 payable on retirement for each year of service. A benefit of 100 is attributed to each year. The current service cost is the present value of 100. The present value of the defined benefit obligation is the present value of 100, multiplied by the number of years of […]

Replacement award requiring post-combination service replacing vested acquiree award Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.0 million for awards of Entity B also with a fair value at the acquisition date of €1.0 million. The replacement awards require one year of post-combination service. The awards of Entity B being replaced had a vesting […]

Deficit-clearing future minimum funding requirements when refunds are not available [IFRIC 14.IE9-IE21] An entity has a funding level on the minimum funding requirement basis (which is measured on a different basis from that required under IAS 19) of 95% in Plan C. Under the minimum funding requirements, the entity is required to pay contributions to increase the funding level to 100% over the next three […]

Replacement award requiring post-combination service replacing unvested acquiree award Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.0 million for awards of Entity B also with a fair value at the acquisition date of €1.0 million. The replacement awards require one year of post-combination service. When originally granted, the awards of Entity B being replaced […]

Effect of a minimum funding requirement when there is an IAS 19 deficit and the minimum funding contributions payable would not be fully available [IFRIC 14.IE3-8] An entity has a funding level on the minimum funding requirement basis (which is measured on a different basis from that required under IAS 19) of 77% in Plan B. Under the minimum funding requirements, the entity is required […]

Accounting for post-acquisition changes in estimates relating to replacement awards Entity A grants an award of 1,000 shares to each of two employees. The award will vest after three years provided the employees remain in service. At the end of year 2, Entity A is acquired by Entity B which replaces the award with one over its own shares but otherwise on the same terms. […]