This document explores the accounting treatment and classification of accumulated unused annual leave under the Indian Accounting Standards (Ind AS) framework, specifically referencing Ind AS 19. The company currently classifies its unused leave liability as a short-term employee benefit, even though employees typically accumulate leave over an extended period, often using or encashing it after more than 12 months. The primary issue is whether this classification aligns with Ind AS 19, which defines short-term employee benefits as those due to be settled within 12 months of the reporting period. Additionally, the document highlights the role of Ind AS 1 in classifying liabilities as current or non-current, based on when the benefits are due to be settled.
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