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- May 14, 2020 at 3:00 pm
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??
LiamMay 14, 2020 at 8:30 pm
They are reconciling the NET pension liability – so contributions will be a deduction in the working when you are proving the remeasurement difference for OCIMay 15, 2020 at 9:59 am
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?
LiamMay 15, 2020 at 5:11 pm
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
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