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Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › Question about employee benefit
Hi,
” After conculting with the actuaries, the company decide to reduce its contributions for the year to $45 million.”
Why this statement would result to an increase of current liability by $45 million ? I thought contribution received only causes an increases in plan assets.
Anyone?
Liability on defined benefit plan =
opening net assets/deficit
+ finance cost
+ Current year service cost
+ past service cost
– Contribution paid to scheme.
Therefore, if you reduce the contribution paid, your liability will increase.