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Hello,
In relation to the defined benefit pension scheme in Q4 of March 2020, it states the following –
“During the year, benefits of $6 million were paid under the scheme and Ecoma
Co contributed $10 million to the scheme. These payments had been recorded in the financial statements.”But in the solution the contributions of $10m are deducted….is this not double counting??
Thanks
LiamThey are reconciling the NET pension liability – so contributions will be a deduction in the working when you are proving the remeasurement difference for OCI
HI Stephen,
Thank you for your reply. I do understand that the accounting entry for contributions paid into the pension scheme by the employer Ecoma Co, is Cr Bank $10m, Dr Net Pension Obligation $10m.So, as the question stated that the “These payments had been recorded in the financial statements”, my impression was that the debit of $10m was already reflected in the closing net pension obligation of $78, and hence did not need to be shown when reconciling the opening and closing net pension obligations?
Liam
You are trying to prove the remeasurement difference – contributions is one reason why the opening and closing net liability are different – so it’s always needed in the calculation
Hi Stephen,
Could you kindly explain how they came about the net pension obligation at 30 September 20×5 of $24.0 in the solution to Ecoma Co.
The question gave the net pension obligation at 30 September 20×5 at $78.
Thank you.
Looking at the version on the ACCA website both the question and the answer show 78. If your version says 24, go with the official answer.
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