Employee Benefits Flashcards
What accounting standard is Employee Benefits?
IAS 19
How do you account for a defined contribution pension?
Using straight forward accruals accounting
What determines that a pension is a defined benefit pension?
The employer guarantees the final pension payment of the employee
What goes onto the statement of profit and loss for a defined benefit pension?
- Current service cost (definite)
- Net Interest Cost (definite)
- Past service cost
- G/L on curtailment/settlement
What is posted to the OCI with regard to a defined benefit pension?
Remeasurement gain or loss on pension
Write off of any asset if it fails asset ceiling test
Define a defined contribution plan
Where a company promises to put x per year into a separate pension fund for the benefit of each relevant employee. The employee bears the risk of the fund.
Define a defined benefit plan
Where a company promises to put x per year into a separate pension fund for the benefit of each relevant employee. The employer bears the risk of the fund as the employer guarantees the final pension of the employee.
What goes onto the statement of financial position for a pension?
- Net Asset or Liability (non current)
When are the assets and liabilities not netted off?
When the pensions are in different jurisdictions
With interest on asset, which % should you use?
Opening interest rates
What is the accounting entry for contributions?
Dr Pension Asset
Cr Cash
What is the accounting entry for interest in asset?
Dr Pension Asset
Cr P/L
What is the accounting entry for current service cost?
Dr P/L
Cr Liability
What is the accounting entry for past service cost?
Dr P/L
Cr Liability
What is the asset ceiling test? Where is the difference going to be recognised?
Amounts recognised as a net pension asset must not be stated at more than their recoverable amount.
Measure at the lower of net pension asset and the PV of any refunds/reduction of future contributions
The difference must go to OCI: Dr OCI, Cr Pension Asset
