[rjpatterson]

Hi Stephen

Thanks, it is the two sentences below which confuse me. They seem to contradict each other.

“This figure will be unwound each year and the movement recorded as the current service cost (in so far as no other changes to the assumptions are made”

and

“Interest, which is calculated on the opening balance of the benefit obligation, will not be affected by the changes in assumptions. It will be charged to profit and loss at $385 ($7’700 x 5%)”

As far as I understand it, the current service cost in the first year is $7.7M and thereafter there is just the recording of the unwinding of the discount $385,000 each year, recorded as interest cost (both to Profit and Loss)…

[rjpatterson]

Hi Stephen

I know we shouldn’t get bogged down in details, but sometimes it’s hard not to…

In this question, I do not understand why the examiner mentions that the unwinding of the discount each year would be recorded as current service cost – surely it is interest cost? Or is this something in addition?

Thanks,

Robert

[rjpatterson]

Thanks Stephen for yet another concise and excellent explanation!

[rjpatterson]

Perhaps I should add that according to the solution the $6m loss to P&L is comprised of:

(Dinar 80m/5) – (Dinar 80m/6) – $2.7m being exchange loss
(Dinar 80m/6) – (Dinar 60m/6) – $3.3m being impairment

Thanks

[rjpatterson]

Fantastic, thanks! This one was annoying me so much. I guess I made a bit of a typo with the IAS 13 comment above, clearly should be IAS 12 as you say.

Thanks again!

[rjpatterson]

Thanks for the feedback. Looks like there are different sets of questions, then, because one of my part C was ratio analysis (“Bun Co.”) and the other a consolidation of a SToFP.

[rjpatterson]

Do I understand correctly, there is more than one set of questions ?

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