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.
Under IAS 19, termination benefits refer to benefits provided to employees in connection with the termination of their employment, such as redundancy or voluntary retirement schemes. In this case, both offers made by XYZ Co. are related to retirement, which falls under the category of post-employment benefits rather than termination benefits. Therefore, according to IAS 19, XYZ Co. would not recognize a liability for termination benefits for either offer.
C. Nothing for either offer. These amounts are post-employment benefits because they relate to retirement.
