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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › BPP Book illustration 2 Defined benifit plan,pg 87
Deat Richard,
in this ilustration past service cost i,e gain on curtailment is calculated as 12-9=3 leading to decrease in pension plan liability by 3 only,,,, why is 9 ,the benefit payment deducted to decrease the liability where this benefit payment has net effect i,e it reduces both pension liability ans asset i,e
Dr pension plan liability 9
cr pension plan asset 9
further more the reduction in employees lead to reduction in liability leading to a gain i,e
Dr, pension plan liability 12
cr P/L Gain 12
thus the pension plan obligation is decreased by 12 plus 9 so why 3 is calculated?,,
plz explain
Hi,
The reduction in the scheme liability is not as you suggest above. The entry required is:
DR Liability $12 million
CR Bank $9 million
CR SPL $3 million (balancing figure)
Thanks