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Essay / Recognition and measurement of IAS 19 – employee benefits
IntroductionAccording to the conceptual framework for preparing and presenting financial statements, “recognition is the process of incorporating an item into the balance sheet or income statement that meets the definition of an item and satisfies the recognition criteria", while "valuation is the process of determining the monetary amounts at which financial statement items should be recognized and carried on the balance sheet and income statement" ( NTU, 2011). In other words, during the accounting process, any item must belong to the financial statements and must generate probable future economic benefits to or from the business and can be reliable and meaningfully measured at cost or value. Thus, in order to prepare good financial statements, proper accounting and reliable measurement are necessary and important. Unfortunately, this concept comes with some surrounding issues, and this simple article aimed to explore and discuss the issues surrounding the accounting and valuation of one particular item – employees. benefits in the financial statements of British Airways plc, which is the UK's largest scheduled international airline and one of the world's leading premium airlines (BRITISH AIRWAYS, 2011). The author planned to critically analyze three mainly employee benefits, namely short-term employee benefits, post-employment benefits and termination benefits, through the annual report of British Airways. However, measurement can be complicated. Sometimes the company must estimate the amount of benefits and record them in the financial statements, such as paid vacation and health care. But on the one hand, the company still needs to find a better way to measure the average amount. of paper......mf.org/external/np/sta/ueps/2003/080103.pdfIatridis, George. 2010, International Financial Reporting Standards and Financial Statement Information Quality. Flight. 19, number 3, pages 193-204. International Journal of Financial AnalysisIFRS Foundation, 2011, IAS 19 Employee Benefits. [Online] Accessed 11/27/2011, available at: http://www.ifrs.org/NR/rdonlyres/085C6BBB-A728-4F08-B00F-D7F5B5C9910C/0/IAS19.pdfMelville, Alan. 2009, International financial reporting: a practical guide. 2nd edition, London: Prentice HallNTU, 2011, Framework for the preparation and presentation of financial statements. [Online] Accessed 21/10/2011, available at: https://now.ntu.ac.uk/d2l/lms/content/viewer/main_frame.d2l?ou=130510&tId=611855PWC, 2011, IFRS and US GAAP: similarities and differences – recognition of employee benefit expenses. Flight. October, pages 69-71. PWC LLP