- March 6, 2020 at 1:44 pm
during the year end 30 November 2003 the directors of Jecy co decided to form a defined benefit pension scheme for the employees of the company and contributed cash of 160 m to it on the final day of the reportin period. details related to 30 November 2003
present value of obligation 208 m
fair value of plan asset 200 m
current service cost 176 m
interest cost 32 m
expected return 16 m
the only entry in the financial statement made to date is in respect of the cash contribution which has been included in trade receivables. the directors have been uncertain as to how to deal with the above pension scheme in the consolidate sfp.
deficit is reported as a liability 200 – (208) = (8) m
the note to the SPLOCI for the year includes
current service cost – net interest = 176 – 16 = 192 m
OCI gain 24 m
adjustment to the sfp
Dr retained earnings 168 m
Cr receivables 160 m
Cr define benefit pension scheme liability 8 m
could you please explain me why the amount of 160 m is debited to retained earnings and no to the benefit pension scheme asset ?March 6, 2020 at 9:08 pm
IAS 19 is not on the FR syllabus, so you would be best to ask this question to Steve on the SBR forum instead.
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