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May 5, 2016 at 7:21 pm
January 27, 2016 at 2:04 pm
I am confused where does 7% and 8% IC come from. I thought it should be 7.5% and 8.5%.
Thank you for explanation
November 25, 2015 at 1:12 am
Hiya Mike, just some clarification, some of the stuff said in the example is not longer relevant? like the corridor 10%? also regarding past service cost of 60k will that be considered fully in the obligation? because thats how it seems its been in other examples ive seen?
November 12, 2015 at 2:28 pm
I believe someone asked previously on the answer for example 2 about the interest cost being 7% x 30,000 and 8% x 191,000 and you related it to NET amount.
My understanding is that you’ve got 30,000 from (930,000-900,000) as a NET.
but how did you get 191,000 ?
(1,046,000 -915,000) is not 191,000
Also, the answer sheets on remeasurements seems to be clearer , is it because the question in the video is slightly different and backdated?
Hope to hear from you soon. Thank you
November 12, 2015 at 2:49 pm
1,046,000 + 60,000 – 915,000 = 191,000
At what date did the past service costs get recognised?
March 27, 2016 at 1:14 pm
How the apportionment is don for 60000 pscfe 20 and psc curent employees 40000
September 30, 2015 at 2:24 pm
On page 77 of the course notes there’s a ‘Disclosure for 2010’ table at the top for this question, can you please give figures for this table so I can check I’ve done it correctly?
September 30, 2015 at 5:58 pm
I believe that the lecture picks out the figures for disclosure from the example as I work it on the screen
It should be straight forward enough anyway.
Anything with a balance carried forward will be disclosed (Fair value of plan assets, Present value of future obligation) and anything to do with “this year” will be accounted for through the statement of profit or loss
Besides, is there not a solution in the back of the course notes?
October 4, 2015 at 8:19 am
The lecture does, kind of, I just wanted to double check because the answers aren’t in the back of the lecture notes for this part of the question. But it’s ok I think I’ve got it correct!
October 4, 2015 at 9:10 am
August 24, 2015 at 6:05 pm
why don’t fv of pa have interests?
August 24, 2015 at 11:37 pm
Because we now calculate interest on the NET obligation or NET asset since the revision to the IAS
August 24, 2015 at 6:04 pm
Why fv of pa don’t have interest?
August 23, 2015 at 4:55 pm
I looked at your answer for this example, net interest cost 2004 7%x30000 and 2005 8% x 191000, can you please advise where 30000 and 191000 are from? Thank you.
August 23, 2015 at 5:00 pm
These are the NET figures for the Obligation Account and Fair Value of Asset Account at the beginning of each year
May 25, 2015 at 10:19 pm
can you advice if the lecture would be updated for june 2015 exam, as you said corridor and ugly accounts are no longer valid.
thanks in advance
May 25, 2015 at 11:42 pm
Hi, no, there’s absolutely no way that I can record the revised lecture for employee benefits in readiness for the June 2015 exam. All I can promise is that I shall TRY to record it in time for September, but that’ll be no good for you because you will have the results in August and be on the way to the option papers
May 25, 2015 at 11:43 pm
Sorry, an afterthought. The notes are up to date and shouldn’t be too difficult to follow
June 22, 2015 at 4:17 pm
So even for september exam we should follow the notes and not this lecture??
June 22, 2015 at 9:18 pm
May 14, 2015 at 11:44 am
Since my last comment Im now reviewing this chapter as part of my revision and with more care since I had skipped this and later questions in the chapter during learning it the first time around. Im having a lot of trouble trying to figure out how (or perhaps more appropriately why) we arrive at the figures for net cost of 2100 and re measurements (and what is a remeasurement) of 53,000 and 153,900. (I guess the confusion is due to the differing answer in the notes compared to the video since the changes). All the rest is very easy to me in this Q but I have wasted too much of the limited time left trying to figure this out and so I once again turn to you for another dose of your kind wisdom and guidance!
Thanks in advance from your number 1 fan (…and now I sound like a stalker…but im not…really… lol).
May 14, 2015 at 5:30 pm
Post this on the Ask the tutor page – I’ve no time just now to answer it and it will disappear from recent comments before I can get back to you
April 21, 2015 at 11:50 am
you say you have a net credit on the SOFP? does this mean a net liability?
what im confused about is what account will it be under? please sir can you clear this up for me?
April 20, 2015 at 4:49 pm
Im confused about the disclosure on the balance sheet you mention at 17:20?
What do you mean by this?
April 20, 2015 at 4:59 pm
It’s explained shortly after 17.20! There’s a net position of $15.?m – from memory, a net obligation
What’s not to understand?
April 20, 2015 at 5:17 pm
you say you have a net credit on the SOFP? does this mean a net liability?
what im confused about is what account will it be under?
April 17, 2015 at 2:42 pm
Thanks a million for these amazing lectures!!! I have just passed F7 with ease (an exam which I truly hated) thanks to your help and Im now attempting my final ACCA exam P2. One concern…I know these lectures are free and I appreciate anything I can get from you all without any other expectations however I have noticed that there are much less revision and pass papers for P2 and this lecture seems to be a bit out of date. I just want to ask if you think that with the existing videos on the website and the course notes if you think we could be prepared enough to successfully attempt the P2 or do we need more material. If you think more material is needed do you have any suggestions.
In any case, thanks again to all the team for this fantastic website!!!!
April 17, 2015 at 5:41 pm
Thanks for the praise! You’re right of course that this particular video is out of date and needs to be rerecorded – hopefully some time this year, but no promises and almost certainly not in time for the June exam.
I think it’s the only lecture that is out of date and the course notes are up to date so I don’t see it as a major issue – I simply need to get recording employee benefits.
Before you come back again, there are no recorded lectures for the last 12 or so chapters either. However, those I can excuse on the basis that, subject only to IFRS9 and financial instruments generally, the topics are relatively straight forward and should be within the capabilities of a dedicated conscientious student.
Even these chapters will probably be the subject of a recoding at some time in the future but with these I’m not even looking at 2015.
The notes are all up to date including notes on integrated reporting and on IAS 41 Agriculture
April 17, 2015 at 6:30 pm
Great! Exactly what I wanted to hear! Thanks! If you have any suggestions of how to deal with these less straight forward subjects that you mentioned pls let me know. Thanks again!
April 17, 2015 at 7:01 pm
The best way that I can think of is repeated reading of the questions 2 and 3 from past exams.
They cover pretty well every IFRS and IAS and give you an indication of the sort of question that this examiner is likely to ask.
Remember, the P2 exam is only about 35% computational with the rest being written. Remember too that the suggested solutions include everything that could be ncluded within an answer together with references liberally spread throughout.
You cannot begin to hope to dream about achieving the depth of these answers so do not panic!
Yes, read the course notes to get a flavour of what’s involved but then get into the printed solutions from a revision kit.
April 17, 2015 at 7:19 pm
Thanks for that VERY useful info…. I didnt really expect a reply to that last comment not to mention such a lighting fast one!
About the employee benefits…how about a bottle of 20 year old cognac as a thank you? (And Im sure Ill manage without new recordings.) I definitely owe you at least that…we all do!! 😉
April 17, 2015 at 7:45 pm
I don’t know how much you know about me but I have to tell you that I’m a pensioner! There’s no way I can afford a bottle of 20 year old cognac. I could possibly stretch to a pint of beer should we ever meet but I’d have to start saving straight away.
April 17, 2015 at 7:48 pm
Leo, I should have said this earlier – this type of query should really have been on the Ask the Tutor forum. Please bear that in mind when you feel the need to write again
March 14, 2015 at 4:55 pm
This is to request you to please upload lectures related to IFRS 9 and IAS 32 .
An early action to this request will be highly appreciated.
Thanks In Advance !
March 7, 2015 at 9:50 am
The video lecture on example 2 chapter 7 Employee Benefits IAS 19 was clear and made the use ugly accounts quite simple but not until i read comments from other students saying that ugly accounts are no longer applicable. sigh!!
March 7, 2015 at 1:21 pm
Yes, sorry 🙁
It’s on my list of “things to do”
That list is growing each week and I’m going to have to schedule a recording session to deal with it all.
The course notes are up to date and Ugly Accounts (as well as 10% corridor) have now gone – consigned to history
December 4, 2014 at 11:53 pm
any updated lecturer video on revised IAS19 as the unrecognised losses etc are no longer applicable…..HELP
December 5, 2014 at 5:23 am
Coming soon – but not in time for December 2014, sorry
November 24, 2014 at 10:40 am
Can you pls explain how you have gotten the answers for this example in the updated notes?
November 12, 2014 at 11:49 am
lecture is not up to date sir. its difficult cox of that. but notes are updated.. plx upload the up to date video
November 12, 2014 at 4:05 pm
I shall certainly have Admin upload the video – just as soon as I have time to record it.
It is virtually 100% certain that that will not happen before this December’s exams so hopefully you won’t need it
November 4, 2014 at 1:35 pm
The last post comment was dated back in April 2014.
Hence, to confirm. Based on the lecture video, I just ignore the 10% corridor and the rest remain as it is, right?
November 12, 2014 at 4:06 pm
I have not yet recorded a revised version of the Employee benefit lecture. It’s on my “To do list” for this forthcoming close season
April 15, 2014 at 4:03 pm
Please upload the lecture according to revised IAS 19, the revision has been incorporated in the course notes but not in the lecture.
salvia cardoso says
February 25, 2014 at 12:41 pm
Hello Mr. Little
The lecture notes are different to the lecture so I am a bit lost when following example 2. For example, where did 53000 (remeasurement) come from?
Also is there some information missing from the question in the course notes? eg additional actuarial information.
February 22, 2014 at 10:15 am
Hope you are doing fine.
I am aware that there is no more corridor approach and we are recognizing the losses and gains in there year of happening.
However just wanted to reconfirm that instead of taking the total opening balance of FO on which we unroll the discount,we are taking the net amount i.e (FO-PO) which we call NIC. Is it right ? If yes why so, I understand that their will be no change as both the re measurement and IC go through PL.
October 29, 2013 at 8:57 pm
The lecture does not match the current lecture notes. My Jolanta question is not the same as the lecture video. Is there anything I should not be doing or doing extra as the question I have is shorter? Thank you, am a little confused.
October 10, 2013 at 9:12 am
let me go straight to the point. what i am saying is this, in F7 you gave lectures and during your revision you covered a lot of past exam questions: P2 is diffrent. no revision. i dont know if it is a change of approach
October 10, 2013 at 11:30 am
Ah! Now I understand! Sorry for being so slow. In fact, during the F7 lectures we go through NO past questions (possibly with the exception of questions 2 where there is not much to lecture and questions 3 where, after a brief lecture we apply the principles to some – not many – past questions)
P2 is heavier with a lot more to cover in lectures and we still have only 5 days. Even that is reduced by a half day mock exam in the final afternoon. 4.5 days is not enough to lecture the syllabus, let alone enjoy the luxury of attempting past exam questions.
In F7 I have worked through past exam questions and recorded them in my bedroom at home and I have never so far worked up the enthusiasm to do the same with the P2 past questions. Maybe, some time soon, I will find that enthusiasm but, trust me here, it is not likely to be in time for your December sitting
So, with humble apologies, I must leave it to you to fight your way through those awful consolidation exercises ….
….and I apologise for not having understood your previous posts
Should you come across any particular issues when you are practising, post again and I shall try to answer them as soon as I am able
October 10, 2013 at 11:48 am
thank you very much and hopefully you may find time to do it before the june exams so that some of us who will be resitting the course will benefit too
October 8, 2013 at 3:23 pm
hi Mike i am just listening to a video on you tube on IAS 19 and the guy was saying that the usage of the 10 percent corridor is no longer acceptable: everything is taken to the statement of Comprehensive income. i dont when this lecture was recorded thus i would like you to clarify me if you can please
October 8, 2013 at 4:54 pm
10% corridor is gone – I seem to remember that I have recorded an up-to-date version of this lecture. Not only has the corridor gone but so too have the UGLY accounts (now recognised as incomes or expenses in the year in which they occur)
October 9, 2013 at 12:09 pm
thanks Mike for your timely response:
but mike i would like to make this comment and i hope you will think about it. I must confess that before i started doing ACCA people used to say ACCA is difficult and that people start and leave it along the way. Mike the work you people have been putting up here has gone a long way to make ACCA look easy: You did did not only give us the confidence but you also made things look simple. I have always been telling people i meet who want to do ACCA to use opentuition because the lectures there are amazing. I am going in for my first level three paper this december and i have never failed any before thanks to the lectures and revision we get here. Sometimes we find it difficult to understand the texts but your lectures having been making things easy for us: I must say it has not only been the lectures but the revision as well. I dont think i would have been passsing ACCA exams without going through the past papers: this just tells how important the revision is. Mike your revision in F7 made F7 look simple. As i earlier said I am going in for my first professional courses and without the revision you are now making it look difficult
October 9, 2013 at 3:57 pm
I was smiling all the way through your post …… until I reached the last 7 words!
As I understand it, the video lecture is still being played despite the fact that the course notes have superseded the video and that point is made on numerous occasions in this thread.
There will (probably) be no more video recordings – at least, not in the foreseeable future so we all will now have to rely on audio recordings and course notes. If I have not already recorded the “updated” Employee Benefit recording, then I’m sorry and I shall hopefully remember to do so this session. Unfortunately, that’s unlikely to happen in time for you doing the December 2013 exam.
Ok, so no recording. But the course notes are up to date and the suggested solutions to the course notes examples are also up to date so you’re not entirely in the dark without a candle and facing an unknown vicious predator. Try to work through the “big” example (Jolanta?) and, if you come across another issue which you feel you can’t resolve, come back to me
October 9, 2013 at 4:54 pm
you must have posted the right reply to the wrong post. i was talking the need for revising some past papers here: it increase our confidence before the exam:
October 9, 2013 at 10:08 pm
I cannot (having read your post again) see how I could possibly interpret your post as a question about the need for revising some past papers. I can agree that working through past exam questions will give you confidence before walking into that exam room but “As i earlier said I am going in for my first professional courses and without the revision you are now making it look difficult” does not seem to bear any resemblance to a question concerning revision of past exam papers!
However …. should you still need any help, please do post again! I’m always happy to give you the best of my limited wisdom 🙂
May 19, 2013 at 7:12 pm
I seemed to be following employee benefits fairly well up until the course notes and the lectures went their own separate ways. I hope you will rescue us from all the confusion by updating the Lecture Video for the ‘not so far’ June 2013 exams.
PS: You are a life saver and a LEGEND!
May 30, 2013 at 8:35 am
i worked out this solution based on the layout in BPP. Mike or someone else maybe able to confirm if correct or not?
PV OF FO
interest (7% * 930000) 65,100
BENEFITS PAID (140,000)
LOSS ON REMEASUREMENT (BALANCING) 90,900
ACTUARIAL CLOSING 1,046,000
2010 PSC 60,000
BENEFITS PAID (165,000)
interest (8% * 1046000+60000) 88,480
LOSS ON REMEASUREMENT (BALANCING) 520
ACTUARIAL CLOSING 1,135,000
FV OF PA
2009 OPENING 900,000
BENEFITS PAID (140,000)
INTEREST (7% * 900000) 63,000
LOSS ON REMEASUREMENT (10,000)
ACTUARIAL CLOSING 915,000
2010 CONTRIBUTIONS 103,000
BENEFITS PAID (165,000)
INTEREST (8% * 915000) 73,200
GAIN ON REMEASUREMENT 13,800
ACTUARIAL CLOSING 940,000
EXPS RECOGNISED IN P& L
NET INTEREST (65100-63000) 2,100
2009 TOTAL P&L 102,100
LOSS ON FO (90,900)
LOSS ON PA (10,000)
2009 Total (100,900)
NET INTEREST (88480-73200) 15,280
2010 TOTAL P&L 180,280
LOSS ON FO (520)
GAIN ON PA 13,800
2010 Total 13,280
BALANCE SHEET 2010 2009
PV OF FO 1,135,000 1,046,000
FV OF PA (940,000) (915,000)
NET ASSET 195,000 131,000
March 23, 2013 at 8:18 am
The example 2 illustrated in the video was not the same the as the lecture note for June 2013. Kindly advise whether the new version will be uploaded to reflect the solution for the new example 2 question. Thanks
November 11, 2012 at 1:29 pm
I refer to the printed solution and noted for year 2, that the additional obligation is not considered in the net interest calculation. Interest is (1046-915)*8% instead of (1046+60-915)*8%. Is this correct and why is the additional obligation not considered for the roll up in 2010? Many thanks for an answer in advance.
November 11, 2012 at 3:22 pm
@ojss, Ok, ok! I am aware that the answer is now out of date – see my reply to the post from two strings ago. The net interest cost should be calculated on the net figure of “brought forward obligation + 60,000 – brought forward plan assets.
There’s now no Expected Return on Plan Assets, no 10% corridor, no Re-measurements.
Yes, I know! I have to re-record. But that’s not going to happen in time for the December 2012 exams. Sorry
November 11, 2012 at 3:56 pm
@MikeLittle, sorry that I bothered you. I understood that the recording is outdated. But I thought that you said that the course notes are up to date and reflect the changes. Thats why I asked, refering only to the notes.
Many thanks for the quick answer.
November 11, 2012 at 5:53 pm
I think the course notes ARE up to date – though I may have missed in the course notes the increase of 60,000 at the start of the year. Certainly the course notes have eliminated the 10% corridor and show the NET interest cost.
September 23, 2013 at 1:52 pm
I dont understand how is that 60 split? How do you know that 20 relates to PSCFE and 40 to PSCCE. what indications are there given what calculation did you use
November 4, 2012 at 11:44 am
The old method (with 10% corridor and deferring past service cost) is still valid for 2012. But in fact many companies chose to apply the changes in IAS 19 earlier (especially when this application lead to an increase in retained earnings and/or in equity).
In my country, we have problems with the treatment of deferred taxation on these remeasurements (unrealised actuarial gains and losses). We had accrued in the past deferred tax on them, but now it is not clear, whether and how, they could be deducted for tax purpose because their amount is restated and transferred as an equity component. Does someone have the same problem?
October 1, 2012 at 8:32 pm
The lecture not updated,,the question is dfferent from what is in the notes for Decembr,2012.
Update lectures pls.
November 4, 2012 at 3:51 pm
@ulemu25, Yes, ok, ok! I’ll no doubt get to it over Winter, but there’s no way I can do it before the December 2012 exams
June 26, 2012 at 11:13 am
I noticed that the 10% corridor is not given in the answers
Is it still applicable?
August 26, 2012 at 6:23 pm
@najihnw, Apparently there is an amendment to IAS 19 which no longer allows the usage of the “corridor” method, however the actuarial gains and losses are to be recognised in the period incurred. So there are no longer any “unrecognised gains/losses”. I guess the lecture doesn’t reflect that!
August 26, 2012 at 6:34 pm
@tashietash, You’re absolutely correct – the notes DO reflect the revision but the lecture is now not up to date
June 11, 2012 at 1:09 pm
where did the 7.5% and 8.5% come from?
August 26, 2012 at 6:35 pm
@sadie, given in the question? – But this has now changed so that expected return on assets and interest cost rate shall now both be the same rate
May 28, 2012 at 11:16 am
I’m sure that 30 = 930-900 as now we should account net interes cost which is effected by multiplying the NET surplus/deficit in the plan at the beginning of the period by the rate
May 27, 2012 at 4:54 pm
IAS 19 was changed in June 2011 and P2 in June 2012 has to include the change. Does this lesson fit June 2012 session?
May 27, 2012 at 11:41 pm
@oandrienko, I dont think so am puzzled too becase the question in the notes has been revised so I have completely disregarded and used the answer at the back of the notes however I havent got a clue how the numbers in the answers we put together for instance interset was on $30000 , where did the number come from??? Hopefully Mike will be able to do an updated lecture fingers crossed
May 28, 2012 at 1:45 am
@mmariba2000, maybe that $30000 is got from PV – FV (930-900)…not sure too
May 28, 2012 at 11:17 am
@sukiyo0824, I’m sure that 30 = 930-900 as now we should account net interes cost which is effected by multiplying the NET surplus/deficit in the plan at the beginning of the period by the rate
August 26, 2012 at 6:37 pm
@judi, The revision to IAS 19 has not been incorporated into recorded lectures. The revisions HAVE been reflected in the course notes and the notes therefore ARE applicable for December 2012 ( as they were also for June 2012 )
December 6, 2011 at 7:51 pm
Can anyone tell me what the 35 for past service costs for current employees is carried forward as? Whats the double entry:
Credit PVof FO – 60 (SOFP)
Debit PSC FE – 20 (I/S)
Debit PSC CE – 5 (I/S)
December 3, 2011 at 9:27 pm
recalculate ur figure you will get your aner its 35 not 45
December 3, 2011 at 9:26 pm
hey bro outsatndng is 35 not 45 🙂 recalculate it 20plus 5=25
25=60 which is total cost and remaining deffered past sevice cost is 35 which will be vested after 7 years hope you got youranswer
November 12, 2011 at 4:39 pm
Hello Mr Little. Thanks for a wonderful lecture.
I have a question. In recognising the past service costs, what accounting entries were passed. My tots are
Dr Expense – 20,000 (for retired empees)
Dr Expense – 5,000 (for the existing empee’s one year portion of remaning pension earning life) – assumed
Cr Defined benefit obligation(DBO) – 60,000 (total past service cost)
outstanbding – 45
Where does the rst of the debit go?
November 4, 2011 at 7:30 am
im still confused, need help :-s
November 3, 2011 at 5:15 pm
thanks a lot! this is great!
November 1, 2011 at 8:02 pm
ok been through this again in detail and I think the sun is starting to shine through the clouds a little now…………. starting to actually want one of these questions in the exam!!
October 29, 2011 at 11:03 am
think I need to watch this one back a few times – thanks for providing such a comprehensive worked example
October 17, 2011 at 5:40 am
Is he (Mr. Little) who does the lecture for P1 on opentution for last sitting?
October 17, 2011 at 8:00 am
Yes he is
October 10, 2011 at 10:26 am
Hi Mr Little or anyone
should we use $1046,000 as the b/f amount or $1106,000(1046+60k being the psc) when applying the 10% corridor for 2005?
In the lecture you used 1106 x10% -115.4= $4800. Recognise over 8 years hence $600
This is different from the model answer on Page 229 where 1046×10% -115.4= $10800/8, $1350!!
mary Cawley says
September 9, 2011 at 8:26 am
explained in unequivocal language…big brains Mr Little
June 3, 2011 at 7:17 pm
“It’s the brought forward fair value + the amounts paid in + the expected return on plan assets.” Sorry – it’s the brought forward ACTUARIAL VALUE + etc
June 3, 2011 at 7:15 pm
Because 929.5 is not the actual value! It’s the brought forward fair value + the amounts paid in + the expected return on plan assets.
Of those three amounts, only the amount paid in is certain. the brought forward amount is last year’s actuarialvalue and the expected return is just an expectation.
The theoretical value which would hope to have is 929 – but along comes our bl**dy actuary and says “The fair value of your plan assets is only 915”
That’s why we have made a loss.
June 2, 2011 at 6:48 pm
Same question goes for other three actuarial gains/losses!
June 2, 2011 at 6:45 pm
I am OK with everything else but I don’t get one important point.
$915 is the actuarial valuation of FV of PA’s. And the actual value of PA’s turns out to be $929.5 .
Which is greater than actuarial value. Then why are you treating $14.5(929.5-915) as an actuarial LOSS?
Isn’t it supposed to be an actuarial GAIN? Because actual value is greater than expected value!
June 1, 2011 at 12:12 am
May 31, 2011 at 1:12 pm
May 31, 2011 at 12:59 pm
please help me get Bpp Q62 and 63 for P2. Thank u for ur assitance.
May 31, 2011 at 12:21 pm
okay ignore my question. it’s not future value. it’s fair value :/
May 31, 2011 at 10:35 am
Mr.Little, my question is that when we are adding the “amounts paid in to the plan” of 102,000 to the FV of Plan Assets, why are we not adding the FV of the 102,000? or why don’t we add it to the present value of the PA?
May 24, 2011 at 3:19 pm
the question says that one third of the 60000 psc relates to former employees, so 20000 expensed immediately and 40000 are deferred. At year end 1\8 (average of 8 more years of pension earning eployment) of the 40000 are expensed so another 5000. so total expensed 25000
May 19, 2011 at 11:35 am
Did the question indicate how to split the past service cost? if not on what basis was the psc shared pls explain
thanh sang says
May 19, 2011 at 5:11 am
when compare cumulative unrecognised actuarial G/L 0f 115,4 with 10% corridor is (10%*PV of FO=104,6+6,0=110,6) and difference is 4,8. But in the answer in lecture is to compare cumulative unrecognised actuarial G/L 0f 115,4 with 10% corridor is (10%*PV of FO=104,6) and difference is 10,8. Please help me!
May 22, 2011 at 8:58 am
i have the same queries regarding c/f bal. of Yr2005 for “PV of FO” : should we use $1,046 as given to calculate Int. Cost ($1,046 * 8% = 83,680), or shall we use $1,046 + $60 = $1,106 * 8% = 88,480 ? btw, the website and the lecture is really helpful to me! appreicate it!
June 2, 2011 at 6:33 pm
Interest Cost = (PV of Defined Benefit Obligation + Past Service Cost)*Discount Rate
May 9, 2011 at 3:57 pm
nice lecture.many thanks. one question:in the last bit, when calculating the net liability, why the 35000 and 106695 go with 940000. I thought they are should be added to the 1135, because they are the losses
May 6, 2011 at 6:44 am
Aquafire – you’re absolutely correct. It’s a matter of adding all the debits ( plan assets, ugly debits, past service deferred costs ) and deducting from the aggregate credit balances ( pv of future obligation and unrecognised ugly credits )
It really is a summary exercise of adding the debits and deducting that total from the aggregate credits
May 5, 2011 at 5:53 pm
@ unzablu : I think since we are finding the net position of the pension fund, we are just finding the difference between the credit balances and debit balances. Since it is the plan asset and ugly a/c are debits we are subtracting from credit balance of future obligation.
That is what i undertood – not 100% sure.Anyone please correct me if I am wrong.
May 4, 2011 at 9:36 am
thanks for the quick response, however still confused on why a loss is not reducing our plan asset.or should i take it that we should always add the ugly a/c to the plan asset. in what cases does the ugly a/c reduce the plan asset?
May 4, 2011 at 9:14 am
Because it’s an accumulated unrecognised loss. When this loss is recognised ( either by the 10% corridor approach or under the company’s own accounting policy ) it will be debited to the Statement of Income. The Ugly account is a debit balance and is therefore ADDED to plan assets when calculating the NET position for the pension fund.
We’re back in the realms of F3, debits and credits!
May 4, 2011 at 7:51 am
why is he adding ugly account to plan assets i thought subtracting is ideal because its a net loss help please
April 28, 2011 at 4:44 pm
for the first time in my entire life i understand how to deal with pensions
March 9, 2011 at 9:12 pm
December 13, 2010 at 10:31 am
noted with care thanks a million! =)
December 12, 2010 at 2:35 am
anyone can explain where to go get recognise 20 and 40??
December 12, 2010 at 3:33 pm
Split of the $60,000 additional obligation into
1/3 former employees = $20,000
2/3 current employees = $40,000
October 5, 2010 at 9:32 am
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