CERTYNEX IFRS ACADEMY

Evrard SA has two paid-absence schemes: annual leave not taken, which can be carried forward to the following year, and sick leave, which does not accumulate and is paid only when an absence actually occurs. At the reporting date, 1,200 days of annual leave are carried forward and no employee is on sick leave. Which treatment is correct at the reporting date?

Recognise a liability for the expected cost of the carried-forward annual leave, which increases future entitlement, and nothing for non-accumulating sick leave.

Recognise a liability for both schemes, because in both cases the employee acquires at the reporting date a paid right to be absent later in the following year.

Wait until the carried-forward leave is actually taken before recognising its cost, for lack of a cash outflow at the reporting date, and recognise nothing for sick leave.

Recognise a liability for sick leave based on the average absences of the last three years, but not for the carried-forward annual leave.