Accounting for remuneration when calculating average earnings. If a bonus was accrued - accounting entries How to account for the reward

If an author who is not on the staff of an organization creates a work for its order, then take into account the remuneration under such an agreement as part of labor costs (clause 21 of article 255 of the Tax Code of the Russian Federation, clause 4 of the letter of the Ministry of Finance of Russia dated June 16, 2003 No. 04-04-04/63) or as part of other expenses (subclause 37, clause 1, article 264 of the Tax Code of the Russian Federation, letter of the Federal Tax Service of Russia for Moscow dated January 25, 2007 No. 09-14/006377). The organization has the right to decide independently which item of expenses to take into account when calculating income tax for remuneration under copyright contracts (Clause 4 of Article 252 of the Tax Code of the Russian Federation).

If the rights to the work are used to create an intangible asset, then include the remuneration under the author's agreement, including under the ordering agreement, in the initial cost of the intangible asset (paragraph 11, clause 3, article 257 of the Tax Code of the Russian Federation).

In other cases, consider the remuneration under the author's agreement as part of other expenses (subclause 37, clause 1, article 264 of the Tax Code of the Russian Federation, letters of the Ministry of Finance of Russia dated September 14, 2004 No. 03-03-01-04/4/5 and dated September 3 2004 No. 03-03-01-04/1/24).

Situation: is it possible to take into account when calculating income tax remuneration under an author's order agreement concluded with an employee on the staff of the organization?

Yes, you can.

Remunerations under author's order agreements when calculating income tax can be taken into account in the same way as remunerations under civil contracts (clause 21 of article 255 of the Tax Code of the Russian Federation, clause 4 of the letter of the Ministry of Finance of Russia dated June 16, 2003 No. 04-04- 04/63). The Tax Code of the Russian Federation states that under this expense item only payments to citizens who are not on the staff of the organization are taken into account. However, remunerations transferred to full-time employees can be written off as a reduction in taxable profit as part of other expenses under subparagraph 49 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation (letter of the Ministry of Finance of Russia dated March 27, 2008 No. 03-03-06/3/7, dated January 26, 2007 No. 03-04-06-02/11 and the Federal Tax Service of Russia dated October 20, 2006 No. 02-1-08/222).

Also, fees under copyright contracts can be taken into account as part of other expenses on the basis of subparagraph 37 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation (letter of the Ministry of Finance of Russia dated May 7, 2008 No. 03-03-06/1/303, Federal Tax Service of Russia for Moscow dated January 25, 2007 No. 09-14/006377). Provided that the subject of the author's order agreement is to provide the customer with the rights to use the work (Article 1288 of the Civil Code of the Russian Federation).

The organization has the right to decide on which of these expense items to write off remuneration under copyright contracts independently (clause 4 of Article 252 of the Tax Code of the Russian Federation).

If the rights to the work are used to create an intangible asset, then include the remuneration under the author's order agreement in the initial cost of the intangible asset (paragraph 11, clause 3, article 257 of the Tax Code of the Russian Federation).

The principal must register such a document in the Purchase Book and the journal of received invoices. a) the principal sells goods through an agent Debit 45 Credit 41 – Goods transferred to the agent for sale; Debit 62 Credit 90 – Revenue from the sale of goods is reflected; Debit 90 Credit 68 – VAT accrued on sales; Debit 90 Credit 45 – Cost of goods sold is written off; Debit 44 Credit 76 s/ac “Settlements with the agent” – Agency fees have been accrued; Debit 19 Credit 76 account “Settlements with the agent” – Accepted for deduction of VAT on remuneration; Debit 76 of the account “Settlements with the agent” Credit 62 – The debt of buyers is offset; Debit 68 Credit 19 – VAT accepted for deduction on agency fees; Debit 51 Credit 76 s/ac “Settlements with agent” – Money from the sale of goods was received into the current account.

Agency agreement: postings

For example, under a contract one party undertakes obligations to sell goods worth one hundred thousand rubles. For executing an order, the intermediary's commission will be 5%.

Your 5000 rubles. the agent receives according to the order that was originally prescribed in the contract. If the agreement of the parties provides for the payment of amounts due to the contractor after the report on the work done is approved, the agent will receive his 5% through payment (transfer) by the customer party after the fulfillment of contractual obligations.

If the contract provides for the procedure for the intermediary to withhold the amounts due to him, then after fulfilling his obligations, the agent sends the principal the amount minus his own commission. Contents of the contract The agency agreement refers to contracts of a civil law nature.

Agency fees: what is it, how is it paid, accounting nuances

In its absence, inspectors of the Federal Tax Service may present the transaction within the framework of a purchase and sale agreement, which entails more significant taxation. Question No. 3. Is it possible for an agent to use any expenses arising in the performance of obligations when taxing profits? No, only the costs listed in Chapter.
25

Tax Code of the Russian Federation and directly related to the transaction. If the company conducts activities other than intermediary, separate analytical accounting of expenses is necessary. Question No. 4. How can an agent avoid paying VAT if an advance is transferred from the principal to make payments, but the reward from the transaction is not received? Due to the fact that cash the principal are not the property of the agent, VAT obligations can be avoided by including in the contract a condition on payment for services after shipment of goods (fulfillment of obligations with approval of the report).

Accounting for agency agreement

• Home
• Basic accounting concepts

An agency agreement is concluded between a principal and an agent, obliging for a fee and on behalf of the other party or on its own behalf to legally perform meaningful actions. The contract has a fixed-term or unlimited validity period.

Attention

The mediation agreement is drawn up in the form of an agency or commission agreement. To properly set up and implement transaction accounting, it is necessary to know the legal basis of intermediary agreements.

In the article below we will look at how tax and accounting of agency agreements are carried out (accounting for commissions). Provisions of the agency agreement The agreement is concluded in writing with the inclusion of mandatory conditions that define the main aspects of accounting.

The document states:

• The range of legal actions of the agent. An agreement that does not contain the subject matter may be declared void.

Postings under an agency agreement - how the principal and agent keep records

Important! To eliminate possible misunderstandings regarding the fact that the object of taxation is only agency fees, you should be extremely careful about the preparation of documentation at the stage of concluding a contract. This is what the step-by-step wiring will look like accounting the executor's side: Peculiarities of accounting for the principal Due to the fact that the executor's side provides only intermediary services, the object for VAT taxation for the principal will be the full cost of goods or services performed.

It should be noted that for the calculation of VAT, the earliest date will be used regarding the choice of the date of shipment or the date of actual payment for services in whole or in part in accordance with clause 1, article 167 of the Tax Code of the Russian Federation.
Document 62.1 90.1 Reflected revenue from sales (rent) 12,600,000 Sales certificate 90.3 68 (VAT) Accrued VAT on sales (12,600,000*18/118) 1,922,033 Invoice issued 20 60(76) Reflects the amount of the agent's remuneration (500,000 - 500,000*18/118) 423,729 Accounting certificate 19 60(76) VAT on the amount of the agent’s remuneration (423,729*18%) 76,271 Accounting statement 68 (VAT) 19 VAT accepted for deduction 76,271 Purchase book 51 62.1 Receipt of funds from rent minus the agent’s remuneration is reflected 12,100,000 Bank statement 76 62.1 The offset of the agent’s remuneration is reflected against the payment of 500,000 Accounting certificate Another option for accounting for the agent’s remuneration may be to transfer the remuneration directly to the agent: Dr Kt Description of the transaction Amount, rub. Document 60(76) 51 Remuneration transferred to the agent 500,000 Payment order ref.

Features of an agency agreement in accounting

Bill of lading 51 62 Payment for goods sold by buyers 63,000 Bank statement 51 62 Advances received Receipt of advances on account of future deliveries 32,000 Bank statement 76/2 76/3 Providing an agent's report on goods sold and paid for 63,000 Agent's report 76/4 90/1 Accrual of agent's remuneration 4,410 Agent's report 76/3 76/4 Retention of remuneration from the revenue of Plus LLC 4,410 Agent's report 90/3 68 VAT VAT on the amount of remuneration 673 Agent's report 90/2 26 Write-off of agent's expenses for September 2015 230 Agent's report 90/9 99 Reflected profit from intermediary operations 3,507 Agent's report 76/3 51 Transfer of revenue to Plus LLC minus remuneration 58,590 Payment order When reflecting transactions under the contract, the principal and agent should remember to comply with all necessary requirements for documents on on which such transactions are carried out.

Accounting for agency agreements in "1s:accounting 8"

Agent as follows: Debit 50 (51) Credit 62, subaccount “Calculations for advances received” - an advance was received from the customer; Debit 62 Credit 76, subaccount “Settlements with the principal” - reflects the sale of services (work) under the agency agreement; Debit 62, subaccount “Calculations for advances received” Credit 62 - the amount of the advance is credited; Debit 50 (51) Credit 62 - funds received from the customer in the manner of final payment; Debit 76, subaccount “Settlements with the principal” Credit 51 - funds, minus the retained agency fee, are transferred to the principal; Debit 62 Credit 90, sub-account “Revenue” (91, sub-account “Other Income”) - revenue is reflected in the form of agency fees; Debit 76, subaccount “Settlements with the principal” Credit 62 - reflects the offset of agency fees; Debit 90-3 Credit 68-2 - VAT was charged on agency fees.

Accounting entries under the agency agreement with the principal

Therefore, it is more profitable to use a mixed payment method - the risks are significantly reduced. It is better to accrue payment after the transaction is completed, although some entrepreneurs allow the agent to transfer himself a reward from the funds he receives. Despite the fact that the customer relieves himself of the burden of calculations, there are risks of additional requirements from the tax service.
For this reason, the activities of insurance agents in many companies are organized as follows: the agent enters into an agreement with the client, issues him a policy, receives money from him, transfers it to the organization (deposits it to the bank, for example), the company then transfers the remuneration at the end of the month to the card account. Companies also use other methods of calculating payments. The difficulties here lie in the correct preparation of tax and accounting reports.
The popularity of using an agency agreement is explained by the fact that the use of this type of civil law relationship provides the organization with not only a reduction in working time costs, but also tax optimization. In this article we will talk about what an agency agreement is, who are its signatories, and also, using examples, we will look at the features of reflecting transactions under the agreement in accounting. Content

• 1 Agency agreement and its signatories
• 2 Reflection of transactions under an agency agreement in accounting
• 3 Accounting with the principal - example
• 4 Accounting with an agent

Agency agreement and its signatories An agency agreement is an agreement according to which one of the parties assumes obligations to perform work and services, while the other party entrusts the performance of such work for a fee.

How to record agency fees in accounting

The following transactions are reflected in the accounting of Tekhnik LLC:

• Dt 51 Kt 76/1 - in the amount of 100,000 rubles of the advance received.
• Dt 60 Kt 51 – in the amount of 85,000 rubles transferred for the supply of goods.
• Dt 76/1 Kt 60 - the supplier’s obligation is repaid in the amount of 85,000 rubles.
• Dt 002 – goods received from the supplier are assigned for storage.
• Dt 76/1 Kt 76/2 - in the amount of 15,000 rubles of remuneration.
• Dt 76/2 Kt 90/1 – income received is reflected.

VAT is charged on the remuneration amount and the financial result is determined. Peculiarities of accounting for the principal Registration of the principal's transactions depends on the data in the agent's reports. The principal's revenue is all income received from the transaction. The expense part consists of the amounts paid for receiving the goods and the agent's remuneration. Enterprises use account 76 and subaccounts similar to an open agent.

Important

The right is enshrined in the agreement (see → Sample of filling out an agency agreement 2018) Let's consider an example of receiving remuneration with retention. The enterprise Knizhnik LLC is the principal in relation to Tekhnik LLC.

As part of the concluded agreement, remuneration for the intermediary purchase of goods is withheld from the advance payment transferred to the agent. In accounting, Tekhnik LLC uses subaccounts 76/1 for settlements with the principal and 76/2 for accounting for remuneration. Under the terms of the agreement, the agent company received an advance in the amount of 100,000 rubles. The amount of remuneration based on the results of fulfillment of obligations is determined at 15%.

IP on common system And legal entities conduct full-fledged financial statements In particular, records are kept of accounting entries.

In both cases, there is a report from the agent in accordance with the agreement between him and the customer; the form of the report and its content are determined by the parties to the agreement. The main requirement for it is compliance with the legislation on accounting and tax accounting, so that its data can be used when generating reporting.

The law gives the principal the right to disagree with the agent’s expenses, for which claims are sent in writing, and a month is given for sending them. Claims also serve as an element in reporting.

Regarding postings, the agent needs to make a note according to account No. 76, he does not need to fill out account No. 90, since receipts are not considered revenue:

• Dt 51 Kt 76 – funds received from the principal by the agent for expenses in fulfilling obligations;
• Dt 60 Kt 51 - expenses of the agent in connection with the fulfillment of obligations under the contract (purchases, expenses for services);
• Dt 76 Kt 60 - expenses paid by the customer;
• Dt 76 Kt 90.1 - funds that are remuneration for the fulfillment of obligations;
• Dt 90.3 Kt 68.2 - funds paid for VAT.

The principal fills out account 76 to reflect the transfer of funds to the agent:

• Dt 10 Kt 60 - mark of shipment of goods by the supplier;
• Dt 19 Kt 60 - VAT payments for shipped goods;
• Dt 10 Kt 60 - accounting for payment of agent services in the price of goods;
• Dt 19 Kt 60 - VAT amounts under the agreement with the agent;
• Dt 60 Kt 76 - debt to the supplier;
• Dt 62 Kt 76 - debt to the agent;
• Dt 68 Kt 19 - accounting for amounts for VAT payment;
• Dt 51 Kt 76 - remaining funds.

The procedure for accounting for remuneration under civil contracts depends, on the one hand, on who the contractor is and, on the other hand, for which department and what work he performs. Read more about this in our article prepared by berator experts.

An organization can pay employees not only according to labor, but also a civil contract is concluded in accordance with the requirements of civil, not labor legislation.

Civil contracts include:

• construction contracts (Chapter 37 of the Civil Code of the Russian Federation);
• contracts for paid services (Chapter 39 of the Civil Code of the Russian Federation);
• contracts of agency (Chapter 49 of the Civil Code of the Russian Federation);
• (Chapter 52 of the Civil Code of the Russian Federation);
• copyright agreements (Chapter 70 of the Civil Code of the Russian Federation).

Who can work under a civil contract

A civil contract can be concluded:

• with an employee of the organization;
• with a person who is not in an employment relationship with the organization.

If a civil contract is concluded with an employee of an organization, then work under this contract must be performed during non-working hours. Otherwise, such work will be considered. At the same time, according to employment and civil law contracts, the employee must perform various types of work.

EXAMPLE. HOW TO CONCLUSION A CONTRACT AGREEMENT

At Passiv LLC A.N. Ivanov works under an employment contract as a watchman.

"Passive" entered into a contract with Ivanov. According to the agreement, Ivanov must clean the organization’s warehouse premises. In this case, the employment contract with Ivanov is not terminated.

What to consider in the contract

As a rule, civil law contracts with third parties are concluded if the organization does not have the necessary specialists on staff or the organization cannot perform certain work on its own.

The organization itself decides whether to hire a person or enter into a civil contract with him.

A person working under a civil contract is not subject to the internal regulations of the organization, and he is not subject to regulations (working hours, payment procedures for work on holidays and weekends, minimum wage, etc.).

A civil contract does not provide for vacation. If such an agreement stipulates that you need to work on holidays and weekends, then this condition must be met.

Under a civil contract, only the result of the work is paid. The contract states:

• work (services) to be performed;
• procedure for payment for work results;
• start and end dates of work;
• procedure for delivery and acceptance of work;
• requirements for the quality of work;
• liability of the parties for violation of the terms of the contract.

Please note

From the point of view of accounting and taxation, a lease agreement (Chapter 34 of the Civil Code of the Russian Federation) occupies a special place among civil law contracts. As you know, you can rent a vehicle from an individual either without a crew or with a crew. Taxation depends on this. Therefore, the cost of rent and the cost of driving services in the lease agreement vehicle with the crew should be registered separately.

How to accept a job

The fact of completion of work (provision of services) is confirmed by the act of acceptance and delivery.

The form of the act of acceptance and delivery of work (services) under a civil contract is not established by law.

However, you can draw up such an act in the form provided for the acceptance and delivery of work under an employment contract (form No. T-73, approved by Resolution of the State Statistics Committee of Russia dated January 5, 2004 No. 1).

Sample of filling out the act

Poor quality work

If certain work is performed poorly, then, at its choice, the organization may require:

• free elimination of all deficiencies;
• reducing the contract price;
• reimbursement of their expenses for eliminating deficiencies (if, under the contract, the customer has the right to eliminate deficiencies in the contractor’s work).

A person working under a civil contract who causes damage to the organization is obliged to compensate it in full.

Compensation is subject to both direct damage (the cost of missing or damaged valuables) and lost profits not received by the organization.

Please note: lost profits can only be compensated through legal proceedings.

EXAMPLE. HOW TO COMPENSATE DAMAGES UNDER A CONTRACT AGREEMENT

The administration of the concert hall, under a contract, hired workers to install chairs in the hall.

The remuneration for the work is established in the contract in the amount of 75,000 rubles.

During the work, 7 chairs were damaged. The cost of one chair is 1150 rubles.

In accordance with the contract, workers are obliged to reimburse the cost of damaged chairs.

In this case, the contract price will be reduced by the cost of damaged chairs and will be:

75,000 rub. − (1150 rub. × 7 pcs.) = 66,950 rub.

Also, in accordance with the terms of the contract, workers must compensate the amount of income the concert hall lost as a result of the fact that it could not provide seats for all spectators (lost profits).

So, if the cost of an entrance ticket to a concert hall is 400 rubles, then the amount of lost profits will be:

400 rub. × 7 pcs. = 2800 rub.

To recover lost profits, the organization must go to court.

Choosing accounting accounts

The amount of remuneration accrued under a civil contract may:

• included in expenses for ordinary activities;
• be included in investments in non-current assets;
• increase
• included in other expenses;
• be paid from the valuation reserve (for example, the reserve for warranty repairs of finished products).

If remuneration is accrued to an employee of your organization, then its amount is reflected on the credit of account 70, and if to a citizen who is not on the staff of the organization, then on the credit of account 76.

Select a corresponding account based on for which department and what work the citizen performs under the contract. When calculating remuneration under a contract that provides for the performance of work for the needs of the main (auxiliary, servicing) production, make the following entry:

DEBIT 20 (23, 29)   CREDIT 70 (76)
- remuneration has been accrued to an employee (third party) performing work for the needs of the main (auxiliary, servicing) production.

If the contract provides for the performance of work related to the management of the organization (for example, financial analysis activities of the organization), then make a note:

DEBIT 26   CREDIT 70 (76)
- remuneration has been accrued to an employee (third party) performing work related to the management of the organization.

When calculating remuneration under a contract that provides for the performance of work related to the sale of finished products or goods, make the following entry:

DEBIT 44   CREDIT 70 (76)
- remuneration has been accrued to an employee (third party) performing work related to the sale of finished products or goods.

Remuneration under civil law contracts is reflected as part of investments in non-current assets if the work (services) is related to:

• with the creation or purchase of fixed assets ( intangible assets);
• with bringing fixed assets (intangible assets) to a condition suitable for use;
• or reconstruction of fixed assets.

Reflect the accrual of remuneration for the specified work by posting:

DEBIT 08   CREDIT 70 (76)
- remuneration has been accrued to an employee (third party) performing work related to the creation of non-current assets.

If certain works (services) are associated with the acquisition of inventories, then the amount of remuneration increases their cost.

When calculating the reward, make a note:

DEBIT 10 (41)   CREDIT 70 (76)
- remuneration was accrued to the employee (third party) for work related to the acquisition of inventories.

Remuneration under a civil contract is included in other expenses if it is accrued for work not related to the production and sale of finished products or goods (charitable activities, holding sporting events, organizing recreation and entertainment, etc.).

If the performance of work is related to the organization’s receipt of other income (for example, repairs of leased fixed assets), then their amount is taken into account as part of other expenses.

In these cases, when calculating remuneration, make an accounting entry:

DEBIT 91-2   CREDIT 70 (76)
- the employee (third party) is accrued remuneration, which is included in other expenses.

Other expenses also include remuneration to employees liquidating the consequences of emergency events (natural disaster, flood, etc.).

When calculating remuneration for such employees, make an entry:

DEBIT 91-2   CREDIT 70 (76)
- remuneration has been accrued to the employee (third party) performing work to eliminate the consequences of emergency circumstances.

If your company cannot avoid some future costs, it must create a provision. Warranty repairs are one of these cases.

If the organization has formed a reserve for warranty repairs of finished products, then reflect the amount of remuneration under the contract related to their implementation by recording:

DEBIT 96   CREDIT 70 (76)
- remuneration was accrued to the employee (third party) at the expense of the previously created reserve.

When renting a vehicle with a crew from an individual, the following entries are made for the amount of remuneration for the provision of management services:

DEBIT 20 (26, 44)   CREDIT 69-2
- contributions for compulsory pension insurance;

DEBIT 20 (26, 44)   CREDIT 69-3
- contributions for compulsory health insurance have been calculated.

When renting a vehicle without a crew from an individual for the amount of remuneration monthly during the term of the lease agreement, the following entry is made:

DEBIT 20 (26, 44)   CREDIT 70 (76)
- included in expenses rental payments per month.

Please note

To account for leased property, use off-balance sheet account 001 “Leased fixed assets” in the amount specified in the lease agreements. An inventory card is opened for the rented property. The lessee does not charge depreciation on the leased fixed asset.

Payment of remuneration

Reflect the payment of remuneration under civil contracts by recording:

DEBIT 70 (76)   CREDIT 50-1
- remuneration was paid to the employee (third party) under the contract through the organization’s cash desk.

If the reward is transferred by bank transfer, then make an entry:

DEBIT 70 (76)   CREDIT 51
- remuneration to the employee (third party) under the agreement is transferred to the recipient’s bank account.

Personal income tax on payments under civil contracts is withheld from the amount of the employee’s remuneration when it is paid.

When withholding personal income tax from the amount of remuneration paid under a civil law agreement to an individual who is not registered as an individual entrepreneur, make the following entry:

DEBIT 70 (76)   CREDIT 68 subaccount “Calculations for personal income tax”
- personal income tax is withheld from the amount of remuneration (rent).

Remunerations under civil contracts (except for a lease agreement) and for driving services under a lease agreement for a vehicle with a crew are subject to contributions for compulsory pension insurance and contributions for compulsory medical insurance.

Let's consider the basic rules for recognizing and disclosing information according to IFRS about all kinds of benefits provided to employees by employers.

IAS 19 Employee Benefits prescribes rules for the recognition and disclosure of various types of benefits that employers provide to their employees.

For example, you may have read or heard about the benefits that Google provides to its employees. Let's name a few of them (in addition to the usual salaries): free haircuts, gourmet cuisine, high-tech toilets, medical care on-site, travel insurance, fun things to do near the office, paid maternity leave, etc.

Google even provided "workplace death benefit"- If a Google employee dies while working, his or her spouse continues to receive 50% of the employee's annual salary for the next decade.

But now let's look at all this from the point of view of the CFO. There are no problems taking into account remuneration such as wages or free haircuts. But what about that death benefit?

The problem here is that compensation is not paid while the employee is working for the company... not until later. And Google doesn't really know when employees die, and therefore when the liability becomes due.

This is where IAS 19 plays a crucial role. It tells you how to take into account various types employee benefits and how to present them in financial statements.

Why IAS 19?

The main objective of IAS 19 is to define the accounting and disclosure rules for employee benefits. IAS 19 requires a company to recognize:

• obligation if the employee provided a service in exchange for remuneration with payment in the future; and also
• expenses if the company derives economic benefit from the services provided by the employee in exchange for remuneration.

This is a clear demonstration "matching principle"- recognition of expenses during the period of recognition of the corresponding income.

So Google must admit:

• obligation for his death benefit when the employee actually works (and not when he dies);
• expense when the results of an employee's work are consumed.

Classification of employee benefits.

IAS 19 classifies employee benefits into 4 main categories:

• Short-term rewards;
• Post-employment benefits;
• Other long-term benefits;
• Severance pay.

Short-term employee benefits= employee benefits (other than termination benefits) that are expected to be fully vested before the end of the 12-month period after the end of the annual reporting period in which the employees provided the related service.

Post-employment benefits= employee benefits (other than severance pay and ongoing employee benefits) that are payable upon termination of employment.

"Other long-term benefits"= all employee benefits other than current employee benefits, post-employment benefits and severance benefits.

Termination benefits= employee benefits provided in the event of termination of an employee's employment with a given company as a result of:

• (a) a decision by the company to dismiss an employee before his normal retirement date; or
• (b) the employee's decision to accept an offer of remuneration in exchange for termination of employment with the company.

Now, what category do you think Google's posthumous reward falls into? Let's find out further.

What are short-term employee benefits?

Short-term employee benefits include all of the following (if they are payable within 12 months after the end of the accounting period):

• wages, salaries and contributions to social insurance;
• annual paid leave and paid sick leave;
• employee participation programs in company profits ("profit-sharing") and bonuses (premiums); and also
• non-monetary benefits (such as health care, housing, cars, and free or subsidized employee goods).

All Google expenses for free haircuts or gourmet dishes, probably fall into the latter category.

How to account for short-term employee benefits?

The Company recognizes short-term employee benefits as an expense in profit or loss (unless another IFRS standard requires or permits the benefits to be included in the cost of the asset).

Expenses are recognized for the amount of short-term employee benefits that are expected to be paid.

The accounting entry looks like this:

• Debit. Employee benefits expense (profit or loss) or the value of another asset (statement of financial situation).
• Credit. Liability to employees or accrued expenses or cash, if paid.

Short-term paid holidays: The expected value of the current paid leave is recognized:

• when an employee provides services that entitle him to accrue future paid leave (in the case of accrual of unused paid leave);
• or when the employee has taken leave.

Employee profit sharing and bonuses: a company must recognize a profit sharing and bonus liability if

• the company has a legal or constructive (implied) obligation to make such payments; And
• a reliable estimate of this liability can be made.

The above obligation exists if and only if the company has no actual alternative but to pay the consideration for that obligation.

What are post-employment benefits?

Post-employment benefits include benefits such as various pensions, retirement benefits, life insurance and post-retirement health care.

There are two main types of pension plans:

• Defined contribution plans;
• Defined benefit plans

It is extremely important to understand the difference between the two and classify your pension plan correctly as The accounting procedure for each of them is completely different.

What are defined contribution pension plans?

Defined contribution plans are post-employment benefit plans under which the company pays fixed contributions to a separate entity (the pension fund).

However, the company does not undertake a legal or constructive obligation to make additional contributions if the fund does not have sufficient assets to pay all benefits due to employees for employee services in the current and past periods.

How to account for defined contribution pension plans?

An employer must recognize its contributions to a defined contribution plan as an expense in profit or loss (unless another IFRS standard requires or permits the benefit to be included in the cost of an asset).

If contributions are not expected to be paid in full before 12 months after the end of the accounting period, they need to be discounted.

What are defined benefit pension plans?

Defined benefit plans are post-employment benefit plans that are not defined contribution plans. Under such a program, the employer is obligated to pay a certain amount of compensation to the employee, and all investment and actuarial risk therefore falls on the enterprise.

This is where we come to the answer to the Google question: without any further details, it can be assumed that Google's death benefit is accounted for as a defined benefit plan under IAS 19 because:

• it is paid upon termination of employment (after the employee dies);
• Google's commitment is not limited to contributions to any fund; instead, Google's commitment depends on future wages, and therefore the actuarial risk falls on Google.

Accounting for defined benefit plans is probably one of the most challenging issues in IFRS., as it involves incorporating actuarial assumptions into the estimation of liabilities and expenses. Therefore, actuarial gains and losses arise.

In addition, liabilities are valued using the time value of money, since they may be settled many years after the employees have provided the related services.

How to account for defined benefit pension plans?

Employers must take the following steps to account for a defined benefit plan:

Step 1: Determine deficit or surplus.

Deficit or surplus is the difference between current value defined benefit obligations and the fair value of plan assets at the end of the reporting period. To determine it, the company must:

• estimate the final value of the reward.
• use projected unit credit method to estimate how much workers earned for their work in the current and previous periods and include estimates of demographic and financial variables ( "actuarial assumptions") into the calculations.
• discount the amount of the consideration to determine the present value of the liability and the cost of services in the current period.
• Subtract the fair value of any plan assets from the resulting present value of the liability.

Step 2: Determining the amount for the statement of financial position.

Although it is sufficient to determine the benefit amounts to account for a defined benefit plan, IAS 19 requires them to be presented as a single figure on the statement of financial position - the net amount of the defined benefit liability (asset), which is essentially a deficit or surplus. , calculated in step 1, but adjusted to take into account the influence limit value assets.

Asset ceiling represents the present value of any economic benefits obtained by returning amounts from the program or reducing future contributions to the program.

Step 3: Determine the amount for the income statement.

The Company reports the following amounts in its income statement:

• Cost of services for the current period= increase in the present value of defined benefit obligations as a result of employees providing services in the current period;
• Cost of past services= the change in the present value of the defined benefit obligation in prior periods as a result of a change or reduction in the plan;
• Any gain or loss on settlement of the obligation;
• Net interest income or expense on a defined benefit liability (asset).

Step 4: Determine the revaluation for the statement of other comprehensive income.

The Company records the following revaluation in the statement of other comprehensive income:

• Actuarial gains and losses= changes in the present value of defined benefit obligations resulting from adjustments based on experience or due to changes in actuarial assumptions;
• Income from plan assets, excluding amounts included in net interest on the net defined benefit liability (asset).
• Any changes in the impact of the asset limit.

What are other long-term benefits?

Other long-term benefits include the following (unless expected to be settled within 12 months after the end of the period during which the employee provides the related service):

• long-term paid leaves such as sabbaticals;
• anniversary or other long-term rewards;
• long-term disability benefits;
• profit sharing and bonuses; and also
• deferred reward.

How to account for other long-term benefits?

Because other long-term benefits are not subject to the same uncertainty as defined benefit plans, their accounting procedures are slightly simpler.

However, an entity must follow the same steps as for defined benefit plans. The only difference is that all items such as employee service costs and remeasurements of the net defined benefit liability (asset) are recognized in profit or loss. Therefore, they are not reflected in other comprehensive income.

What are severance pay?

The benefits of termination are something completely different from the previous 3 categories. Why? Because they are not provided in exchange for the employee's service; instead they are provided in exchange for termination of work.

Be careful, however, because severance pay sometimes includes both termination and service compensation for the employee.

For example, a company closes one of its manufacturing plants and offers a bonus of CU1,000. all employees who will be laid off. But since this company needs qualified employees to complete the closing process, it offers a bonus of CU3,000. to each employee who will remain in the company until closing.

In this small example, the bonus of CU1,000 paid to all terminated employees represents severance pay, and the additional CU2,000 paid to all employees who remain until closure represents employee service benefits, in mainly classified as other non-current in accordance with IAS 19.

How to account for severance pay?

The key question here is WHEN the severance liability and expense should be recognized. It will be:

• when the company can no longer refuse to pay these benefits (either there is a severance program in place or the employee accepts the severance offer),
• when an entity recognizes restructuring costs (see IAS 37) and therefore offers severance payments to employees.

The next question is HOW to recognize severance payments. This depends on the specific terms of the rewards:

• if severance benefits are expected to be paid in full within 12 months after the end of the reporting period, then the current employee benefit requirements apply (therefore they are recognized as an expense in profit or loss on an undiscounted basis);
• if the termination benefits are not expected to be settled in full within 12 months after the end of the reporting period, then the requirements of other long-term employee benefits apply (therefore they are recognized as an expense in profit or loss on a discounted basis).