Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › gain/loss on settlement
- This topic has 4 replies, 2 voices, and was last updated 2 years ago by Stephen Widberg.
- AuthorPosts
- June 1, 2021 at 2:18 am #622524
Sir am struggling to understand how can a gain/loss arise on settlement? My study text states it is the difference between plan assets paid out and reduction in present value of defined benefit obligation. but i feel won’t the two be same?
like won’t my pension fund transfer as much plan assets as are the plan obligation relating to the employee?
June 1, 2021 at 11:55 am #622605Obligation is 100 – but it’s a theoretical number that few understand, certainly not most of the staff
Amount paid to settle 60 – down to negotiation – employees in a weak position
Gain 40 – I guess that’s capitalism.
But all you have to do is post the double entry. 🙂
July 10, 2021 at 9:40 am #627335so the journal entry of this would be,
Dr. Net Pension obligation 100
Cr. SPL gain 40
Cr. cash 60July 10, 2021 at 9:42 am #627340right sir?
July 11, 2021 at 9:24 am #627426Perfect
- AuthorPosts
- You must be logged in to reply to this topic.