IAS 19 Pensions PDF

Preview

Summary

Download IAS 19 Pensions PDF

Description

IAS 19 Pensions: IAS 19 deals with: Post employment benefits. These benefits are of two types: 1) Defined contribution , 2) Defined benefit.

Defined contribution scheme: Company pays: -

Fixed contribution, In employee’s pension plan, Return is variable but risk is not associated with company, risk of variable return lies with employee.

Journal Entry: Expense

Dr. Cash/Accruals

Cr.

Defined benefit scheme: Company pays: -

Variable contribution, In company’s pension fund, Guaranteed return on retirement ( % × final salary), Risk of adverse return is associated with company.

Presentation: Statement of Financial Position: Asset

FV of asset

Liability

FV of liability

Statement of Profit or Loss and Other Comprehensive Income Service Cost (Current + Past) Interest (Rate × op. balance of liability) Return (Rate × op. balance of asset)

X X X

Other Comprehensive Income Re-measurement (w)

X

Re-measurement (w): Asset Op. Balance Return Contribution paid Benefit paid out Balancing figure c/f (Closing FV)

Liability Op. Balance Interest Service Cost (Current + Past) Benefit paid out

X X X (X) X X X

X X X (X) X X X

Amount to be charged to OCI:

Amount =Balance figure Asset −Balancing figure Liability , or

Amount =Balance figure Asset − ( Balancing figure Liability )

Curtailment: -

When significant no of employees leaves the scheme, Asset and liability are re-measured to FV, Any change goes to SPL, It is adjusted as past service cost Pension liability (Op-Closing) SPL (Past service cost)

X X

Asset ceiling: Normally pension plans are in deficit, but if it is not -

Asset > liability, Company now needs to reduce its contribution in plan, Pension asset’s value cannot exceed the: - PV of amounts not invested in plan. If asset’s value exceeds the pv of amount not invested then difference is expensed through OCI: Asset value Less: Ceiling (PV off amount not need to be invested) Difference

Journal entry: OCI (Difference) Asset

X X

X (X) X...