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There is an Unrecognised loss of 3, which been capitalised into balance sheet/ I dont know how-probably as an asset / which I cant understand also/, but they forgot to use the corridor method. so when we amend this mistake/ I look at the solution using the corridor method we release into the income statement using the corridor method 0.1, which should be an asset, but we are putting into liability. why?
Working 7 in the BPP text shows a journal entry of Dr Retained Earnings 0.1 and Credit Unrecognised Actuarial Losses with the same 0.1
Retained earnings on the SofFP are a Credit Balance. Therefore a debit to Ret Ears is like an expense – it reduces the “Accumulated Profit” figure
Similarly, the Credit to the Unrecognised Actuarial Losses account reduces the debit balance on that account. If we were to recognise the entire balance of 3, per question, we would need to Credit the Unrecognised Actuarial Losses and debit the Statement of Income.
The balance on the Unrecogised Losses account is a Debit balance – the same as Motor Vehicles is a debit balance. That’s why it’s capitalised as an “asset”.
Listen to the OT lecture on Employee benefits – that might help
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