XYZ Co.'s employees have a mandatory retirement age of 65. On 1 April 20X3, XYZ Co. offers (and the employee accepts) 10,000 to an employee that is retiring at 65. On the same date, XYZ Co. also decides to offer (and the employee accepts) 10,000 to an employee that is retiring at 60. What liability should XYZ Co. recognize for termination benefits under IAS 19?
A. 10,000 for the offer for retirement at 60, because early retirement offers are termination benefits
B, 10,000 for the offer for retirement at 65, because mandatory retirement offers are termination benefits
C. Nothing for either offer. These amounts are post-employment benefits because they relate to retirement.
According to IAS 19, termination benefits refer to benefits provided to employees when their employment is terminated before the normal retirement age. In this case, the offer of 10,000 to the employee retiring at age 60 can be considered a termination benefit since it is provided in anticipation of the employee's early retirement. Therefore, XYZ Co. should recognize a liability for termination benefits of 10,000 for the offer made to the employee retiring at age 60.
A. 10,000 for the offer for retirement at 60, because early retirement offers are termination benefits
