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. […]

Accumulating paid absences An entity has 100 employees, who are each entitled to five working days of paid sick leave for each year. Unused sick leave may be carried forward for one calendar year. Sick leave is taken first out of the current year’s entitlement and then out of any balance brought forward from the previous year (a LIFO basis). At 31 December 2013, the […]

Award modified by reducing the exercise price and extending the vesting period At the beginning of year 1, an entity grants 100 share options to each of its 500 employees, with vesting conditional upon the employee remaining in service over the next three years. The entity estimates that the fair value of each option is €15. By the end of year 1, the entity’s share […]

Cancellation and settlement – basic accounting treatment At the start of year 1 an entity grants an executive 30,000 options on condition that she remain in employment for three years. Each option is determined to have a fair value of $10. At the end of year 1, the executive is still in employment and the entity charges an IFRS 2 expense of $100,000 (30,000 × […]

Cancellation and settlement – best estimate of cancellation expense On 1 January 2012, an entity (A) granted 150 employees an award of free shares, with a grant date fair value of £5, conditional upon continuous service and performance targets over the 3-year period ending 31 December 2014. The number of shares awarded varies according to the extent to which targets (all non-market vesting conditions) have […]