Page 18 - 34.2 FR MARCH 22 MTP ANSWER

(b)
(i) Treatment of short term compensating absences: Diamond Pvt. Ltd. will recognise a liability in its books
to the extent of 5 days of PL for 200 employees and 10 days of PL for remaining 800 employees and 2

days of SL for 200 employees and 5 days of SL for remaining 800 employees in its books as an unused
entitlement that has accumulated in 2X19-2X20 as short-term compensated absences.
(ii) Treatment of defined contribution plan: When an employee has rendered service to an entity during a
period, the entity shall recognise the contribution payable to a defined contribution plan in exchange for
that service.

Under Ind AS 19, the amount of Rs. 160 crore (200-40) will be recognised as a liability (accrued expense),
after deducting any contribution already paid i.e. Rs. 40 crore (with contribution of Rs. 200 crore to the
plan) and an expense in the statement of profit and loss.
It can also be seen that the contributions are payable within 12 months from the end of the year in which
the employees render the related service; hence, they will not be discounted.

34.24