Asset ceiling
When plan assets exceed the defined benefit obligation, assess whether the employer can actually obtain a refund or contribution reduction, applying IAS 19 and IFRIC 14. Recognise the lower of the surplus and the asset ceiling. Changes in the effect of the ceiling, excluding amounts included in net interest, form part of remeasurements recognised in other comprehensive income. Assess enforceable plan terms and any minimum funding requirements.
Worked example
Plan assets exceed the defined benefit obligation by $120,000, but the present value of available refunds and future contribution reductions is $70,000. The recognised net defined benefit asset is limited to $70,000 before other relevant adjustments.
Common mistake
Recognising the entire accounting surplus without assessing availability, or treating the asset ceiling as a cap on a net defined benefit liability.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Direct | September 2026–June 2027 |