Measurement (AASB 119) versus Presentation (AASB 101) considerations
How should you classify and measure annual leave entitlements for an entity, and how must you report?
Classification of liabilities as current or non-current can have significant impact on the statement of financial position (balance sheet) of an entity which can affect operating ratios and compliance with bank covenants etcetera. There has been a lot of confusion about whether entities are able to classify a portion of their annual leave liability as non-current due to the changes in the Accounting Standard AASB 119 Employee Benefits which are effective for annual reporting periods beginning on or after 1 January 2013 (i.e. 31 December 2013 year ends).
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