ACCA SBR · Guided practice (Show me how)
Chapter 12: Employee benefits (IAS 19)
Defined benefit pension schemes
Chapter 12 - Defined benefit scheme (Finland). Finland operates a defined benefit pension scheme for all of its employees. The closing balances on the scheme assets and liabilities, at 31 December 2014, were $60 million and $64 million respectively. Finland's actuary has provided the following information that has yet to be accounted for in the year-ended 31 December 2015.
| Actuary's information for 2015 | $m |
|---|---|
| Current service cost | 9 |
| Past service cost | 8 |
| Contributions paid in | 5 |
| Benefits paid out | 6 |
| Fair value of plan assets (31 December 2015) | 66 |
| Fair value of plan liabilities (31 December 2015) | 75 |
| Yield on high quality corporate bonds | 5% |
Chapter 12 - Curtailment (Flannagan). Flannagan announces the re-organisation of its business, resulting in the loss of jobs within the business. The fair value of the plan assets and liabilities, immediately before the re-organisation, were $48 million and $60 million respectively. The plan assets do not change following the curtailment but the pension liabilities are measured at $55 million.
Chapter 12 - Asset ceiling (Brannagan). Brannagan has a net pension asset in its statement of financial position of $30 million. It therefore anticipates that it will not have to pay its usual contributions into the scheme for the next few years. It is estimated that the present value of the future reduction in contributions will be $26 million.
All figures are in $m.
Finland: statement of financial position
Calculate the net pension asset or liability in the statement of financial position of Finland at 31 December 2015.
Finland: profit or loss
Calculate the amounts recognised in profit or loss of Finland for the year ended 31 December 2015.
Finland: workings and OCI
Calculate the expected closing scheme assets and liabilities and the re-measurement gain or loss in other comprehensive income for the year ended 31 December 2015.
Flannagan: the curtailment
Explain the accounting treatment of the curtailment in the financial statements of Flannagan at the curtailment date, and calculate the net pension liability after it.
Brannagan: the asset ceiling
Explain how the net pension asset is treated in the financial statements of Brannagan at the reporting date, and calculate the reduction to the asset ceiling.
Opening this exercise…