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Can anyone please explain the main areas of Pension plan in Consolidated statements? With an example of:
“The actuarial value of Traveler’s pension plan showed a surplus at 1 December 20X0 of $72 million. Losses of $25 million on remeasurement of the net defined benefit asset are to be recognised in other comprehensive income in accordance with IAS 19 (revised 2011). The aggregate of the current service cost and the net interest cost amounted to a cost of $55 million for the year. After consulting with the actuaries, the company decided to reduce its contributions for the year to $45 million. The contributions were paid on 7 November 20X1. No entries had been made in the financial statements for the above amounts. The present value of available future refunds and reductions in future contributions was $18 million”
ThanksYou will have an opening pension asset or liability on the balance sheet, and the various adjustments to it must be made, with the other side going to P&L, OCI or cash depending on what category the adjustment is. For your example:
Opening surplus: 72m Dr
Remeasurement: 25m Cr (Dr OCI)
Net interest/current service cost: 55m Cr (Dr P&L)
Contribution: 45m Dr (Cr Cash)
Closing surplus (before applying asset ceiling): 37m DrAsset ceiling: 18m Dr
Therefore reduce asset by 19m Cr (Dr OCI)
Closing surplus: 18m Dr
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