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Hi Mike – this lecture and previous lecture deal with substantially different questions in the notes
Has the syllabus changed to reflect the questions in the notes and in effect is the lecture therefore irrelevant ?
Thanks
Hi,
The syllabus changed to reflect the updated IAS 19 a few years back. The standard was updated to make it simpler.
The notes reflect the up to date rules whilst the video will need to be updated.
Essentially if you have a defined benefit scheme where the plan assets exceed the scheme liabilities then you can only recognise the net asset on the SFP up to the present value of any reductions in future contributions. Any amounts above this amount are written off through profit or loss.
If you have a net pension asset then companies would likely not put as much cash into the scheme as it is doing well. This is essentially the benefit or saving the company then makes in the future. The asset cannot be shown at above the present value of these savings. Think of it as being prudent with the value of the asset!
It may appear in the exam for a few marks but in the real world it rarely happens as not many companies run a defined scheme and if they do with the way the markets are performing at the moment the asset values won’t be exceeding the liabilities.
Thanks.
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