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Pensions (IAS 19) – Example – ACCA (SBR) lectures

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    • Hi, the 3 figures mentioned will go into Group retained earnings (Working 5) included with other items added/deducted from the Parent’s retained earnings (see Pg 13 of the lecture notes).

    • Consolidated Cash flow (Pension) from the notes. CH 7, page 41, under Pension heading

      1. Add back service costs in operating cash flows as a non-cash-item (like depreciation).

      2. Deduct contributions paid in operating cash flows as a cash outflow.

  4. This has been extremely insightful. I had so much difficulty wrapping my head around working out pension questions and now I have a much better grasp of the subject. I now understand what the service costs are (the name is a bit misleading) and how to record them. The proforma for the reconciliation to work out the re-measurement value is also a big help. it just brings everything together nicely. Just simply plug in the numbers and you should be good!

    Thanks!

  5. The asset is 66 and the liability is 75 and the difference is 9, meaning there is a net pension liability of 9 since the liability is more than the asset.
    But i heard you say there is a net pension asset of 9 . Was it a mistake ?

  6. Magnificent, thank you. At the last, when I watch your lesson, I fully understood pension scheme, especially defined benefits scheme, when the company have risks, but employee gets guarantee benefit.

  8. Return on plan assets = 4, interest = 6.25%
    =>Asset (c/f) = 64 =>Liability(c/f) = 119
    Interest on plan liability= 7.44

    Assume that no cash paid in/out.

    Net Obligation b/f (48)
    Interest expense (7.44)
    Return on Asset 4
    Remeasurement loss (3.56)

    Net obligation c/f (55)

  10. TC has a defined benefit pension plan and prepares financial statements to 31 March each year. The following information is relevant for the year ended 31 March 20X3:
    1. The net pension obligation at 31 March 20X3 was $55 million. At 31 March 20X2, the net obligation was $48 million, comprising the present value of the plan obligation stated at $100 million, together with plan assets stated at fair value of $52 million.
    2. The discount rate relevant to the net obligation was 6.25% and the actual return on plan assets for the year was $4 million.

    can you tell me what to do with the actual return on plan assets?

    • Net Obligation b/f (48)
      Interest expense (6.25)
      Return on Asset 4
      remeasurement loss(4.75) bal fig

      Net obligation c/f (55)

      SPL:
      Interest expense (6.25)
      Return 4

      OCI:
      remeasurement loss (4.75)

      For the return:
      Dr Pension Asset 4
      Cr Interest income 4

    • Return on plan assets = 4, interest = 6.25%
      =>Asset (c/f) = 64 =>Liability(c/f) = 119
      Interest on plan liability= 7.44

      Assume that no cash paid in/out.

      Net Obligation b/f (48)
      Interest expense (7.44)
      Return on Asset 4
      Remeasurement loss (3.56)

      Net obligation c/f (55

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