Recognition and measurement of IAS 19 – employee benefits

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According to the conceptual framework for the preparation and presentation of the financial statements, “recognition is the process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the criteria for recognition”, while the “measurement is the process of determining the monetary amounts at which the elements of the financial statements are to be recognised and carried in the balance sheet and income statement” (NTU, 2011). In other words, during the process of recognition, any item must belong on the financial statements and should have probable future economic benefits flow to or from the enterprise and can be reliable and relevantly measured at the cost or value. So in order to prepare good financial statements, proper recognition and reliable measurement are necessary and important.

Unfortunately, this concept comes with some surrounding issues, and this easy aimed to explore and discuss the issues surrounding the recognition and measurement of the particular item – employee benefits in the financial statements of British Airways plc, which is the UK’s largest international scheduled airline and one of the world’s leading global premium airlines (BRITISH AIRWAYS, 2011). The author planed to critically analysis three mainly employee benefits, which are short-term employee benefits, post-employment benefits and the termination benefits, through the British Airways annual report.

However, the measurement may be complicated. Sometimes the company need to estimate the amount of benefits and recorded in the financial statements, like the holiday pay and health care.

But for one thing, the company still need to figure out a better way to measure t...

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Iatridis, George. 2010, International Financial Reporting Standards and the quality of financial statement information. Vol. 19, Issue 3, page 193-204. International Review of Financial Analysis

IFRS Foundation, 2011, IAS 19 Employee benefits. [Online] Accessed on 27/11/2011, available at:

Melville, Alan. 2009, International financial reporting: A practical guide. 2nd edition, London: Prentice Hall

NTU, 2011, Framework for the preparation and presentation of financial statements. [Online] Accessed on 21/10/2011, available at:

PWC, 2011, IFRS and US GAAP: similarities and differences – expense recognition-employee benefits. Vol. October, page 69-71. PWC LLP
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