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For this questions, I have some queries
https://www.accaglobal.com/content/dam/ACCA_Global/Students/prof/p2/P2%20INT/d15_hybrid_p2int_q.pdf
https://www.accaglobal.com/content/dam/ACCA_Global/Students/prof/p2/P2%20INT/p2int-2015-dec-a.pdf– Working four – exchange difference,
40% is attributed to NCI, however, I don’t see 60% had gone to OCI, why ?For Pension,
– Why do we use 8% instead of 6%?
It said interest rates on good quality corporate bonds fell from 8% at the start of the year to 6% by 31 October 2015“a payment of $3 million was made out of the cash of the pension scheme in relation to employees who left the scheme. The reduction in the pension scheme liability as a result of the curtailment was $4 million”
The accounting entry for curtailment per below, am I correct ?
Dr Liability 4m
Cr Liability 3m
Cr Gain on curtailment 4mBecasue it is in a separate translation reserve.
We use the rate at the start of the year, not the year-end rate as it is the estimate provided by the actuary.
Your last double entry doesn’t balance so has to be wrong! I think it would be
CR Bank $3m
CR SPL $1m
DR Liability $4mOne more question regarding pension. Why do we charge only 2k increase to the liability and not the total net obligation of 17k like in June 2013 Trailer question, the full amount of 6k net obligation credited to the liability?
Hi,
In Bubble the pension is currently at $15 million and needs to be increased by $2 million to get to the $17 million on the face of the group SFP.
The difference in the June 2013 question is that the contributions paid in have been treated correctly, hence reducing the deficit from $2 million to $nil (CR Bank DR Net obligation). So now the scheme needs to be increased from $nil to $6 million at the reporting date, hence the $6 million increase. I can see the confusion however as given the reporting date obligation is $6 million it looks like they’ve added it in in full.
Thanks
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