These amounts are not based on salaries paid to the director under an employment contract. Sirus has
contractual or constructive obligations to make payments to former directors as at 30 April 2008 as follows:
(i) certain former directors are paid a fixed annual amount for a fixed term beginning on the first anniversary of
the director’s retirement. If the director dies, an amount representing the present value of the future payment
is paid to the director’s estate.
(ii) in the case of other former directors, they are paid a fixed annual amount which ceases on death.
The rights to the annuities are determined by the length of service of the former directors and are set out in the
former directors’ service contracts. (6 marks)
Required:
Draft a report to the directors of Sirus which discusses the principles and nature of the accounting treatment of
the above elements under International Financial Reporting Standards in the financial statements for the year
ended 30 April 2008.