IAS 19 Short-Term Employee Benefits: Examples & Explanation

Which of the following is a short-term employee benefit under IAS 19?

1. A plan offering cash compensation to employees based on the company's stock price appreciation between specific dates.
2. A bonus plan awarded to employees on December 31st, payable within 6 months of the following year, based on their performance.
3. A program offering benefits to the company's external service providers, like independent legal counsel.
4. A plan granting employees options to purchase company shares at a fixed price within a specific timeframe.

Answer: Option 2 is correct.

A bonus plan awarded to employees on December 31st and payable within 6 months of the following year, based on their performance, is a short-term employee benefit under IAS 19. Here's why:

• Short-Term Nature: The bonus is payable within a year of the performance period, making it a short-term benefit.
• Employee Compensation: The bonus directly relates to employees' performance and is part of their compensation.

Other options are incorrect because:

• Option 1: This describes a share-based payment plan, often falling under a different accounting standard (IFRS 2).
• Option 3: This pertains to benefits for external service providers, not employees, and wouldn't be covered under IAS 19.
• Option 4: This describes a share option plan, also typically covered by IFRS 2, dealing with share-based payments.