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Hi Sir,
Could you help me with the following queries:
1. Is a pension deficit / surplus a current liability / asset or a non current liability / asset
2. What is the actual % a parent must own to class a company as a subsidiary and associate
CF statement queries
1. Are pension remeasurement gains / losses adjusted for in a CF statement.
2. If benefits are paid to trustees of the pension scheme, then this is paid out of the schemes assets and not the companies. Which bits need to be accounted for in the CF statement if this is the caseHi,
1. The pension asset/liability is usually classified as non-current.
2. Don’t just think about the percentages a parent must own. A parent needs to be able to direct the activities of a subsidiary, whilst it only needs the power to participate in the activities of an associate. We could own 19.9% of an entity but have influence as we have seats on the board of directors or have been involved with material transactions or have provided management advice. In some of the complex groups questions we could effectively own less than 50% of an entity but still have more than 50% of the voting rights and therefore have the power to direct the activities as we can pass an ordinary resolution at the AGM.
3. Re-measurement gains/losses are not adjusted in the statement of cash flows.
4. The benefits paid out to the employees are treated as a cash outflow.
Hope you now understand the issues. Let me know if you need any further help.
Thanks
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