Bennet Co. has decided to terminate a number of employees (which is not part of a wider restructuring in scope of IAS 37). It is unlikely that significant changes to this decision will be made.
What is one of the steps Bennet Co. must have completed in order to recognize a liability for cost of the termination benefits?
A. Communicate the plan to management but not all employees
B. Create a plan but not decide the expected completion date or the expected execution date
C. Communicate to affected employees the type and amount of benefits they will receive should they be terminated
C. Communicate to affected employees the type and amount of benefits they will receive should they be terminated. According to IAS 19, an entity must have clearly communicated to the employees the terms of the termination benefits plan in order to recognize a liability for such costs. This communication is a critical step in recognizing a liability because it demonstrates the entity's commitment to provide the termination benefits.
