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SIR, answer : re measurement is negative 4 what it means actuarial gains ? confused when it is gain or loss
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:
• 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.
• The discount rate relevant to the net obligation was 6.25% and the
actual return on plan assets for the year was $4 million.
• The current service cost was $12 million.
• At 31 March 20X3, TC granted additional benefits to those currently
receiving benefits that are due to vest over the next four years and
which have a present value of $4 million at that date. They were not
allowed for in the original actuarial assumptions.
• During the year, TC made pension contributions of $8 million into
the scheme and the scheme paid pension benefits in the year
amounting to $3 million.
thanks in advanceHi,
If you have an increase in an asset or reduction in a liability then that would be a gain, as both of these are “good” things.
If you have a reduction in an asset or an increase in a liability then that would be a loss, as both of these are “bad” things.
So I believe that you have a re-measurement gain because there is a reduction in the net obligation when you compare our estimated figures to that of the actuary’s at the year end.
Thanks
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