What is a criterion for recognizing postemployment benefits?

Recognizing postemployment benefits relies significantly on the services rendered by employees. This means that benefits should be tied to the efforts employees have put forth while they are actively employed. The recognition criterion is grounded in the premise that benefits are earned as a direct consequence of work performed during the employee's tenure. Therefore, until services are completed, the obligation for postemployment benefits is not due, which emphasizes the connection between the employment duration and the benefits earned.

The other aspects mentioned—current employment requirements, compensation estimation, or government payment—do not fulfill the fundamental criterion for recognition in accounting for postemployment benefits. Focusing on the services rendered aligns with the principles of accrual accounting, which stresses recognizing expenses when they are incurred rather than when they are paid. This principle ensures that financial statements accurately reflect the liabilities related to postemployment benefits, derived from the employee's prior service.