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Hello
In this question, part a -2 asks show the accounting treatment for the 2 pension plans under IAS 19. The answer says for the defined contribution scheme, no assets or liabilities will be recognized and the contributions paid bey the company will go to the P & L while those for the employee will go to the wages account.My question is , is the “no assets or liabilities will be recognized” a standard treatment for a defined contribution scheme?
If not, then why was that said?
If yes, please see this link which mentions otherwise:
https://opentuition.com/topic/macaljoy-dec-2007-exam-kaplan-kit-q-20-aii/Hi,
Yes, for a defined contribution scheme any payments made by either the company or the employee go into the individual employees own pension fund, so there is therefore no asset or liability recognised in the company accounts. Any contributions made by the company are recognised immediately as an expense through profit or loss.
Thanks
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