IAS 19

Question 1

What is the std and rule when there is a PLAN AMENDMENT?

Answer 1

STD : This will result in Past Service Cost (PSC) which falls withing the scope of ias 19. Std req that PSC must be exp to SOPL.

Rule : ias 19 req that exp to sopl in the year in which it is incurred

Question 2

What are the 3 factors that will in result Actuaries revising their assumptions (updated)?

Answer 2

1- PV of DBO
2 - FV of PA
3 - asset ceiling test

Question 3

What is the std for calculating net pension liab/ deficit?

Answer 3

Closing balance of net pension liab/ deficit is calculated at year end by OFFSETTING closing FV of PA to the closing of PV of DBO.

Question 4

What is the effect to sofp when benefits are paid?

Answer 4

Reduce FV of PA and PV of DBO as benefits are taken out of PA to meet payments to retired ee (oblg)

Question 5

What is the effect of sofp when contribution is made?

Answer 5

Increase in FV of PA and result in cash outflow to the co.

Question 6

What is the accounting of CSC?

Answer 6

Exp to SOPL and will rsult in increase in PV of DBO.

Question 7

What is the std for calculating net interest/ finance cost?

Answer 7

Net FC be calculated using OP rate of interest (disc rate %) and multiply it by OP net liab which will be exp to SOPL amd will result in increase of DBO

Question 8

Under DCS what is fixed and what varies?

Answer 8

Contribution in is fixed; benefit varies

Question 9

What can arise to PSC and adjustment shd be made (ias 8)?

Answer 9

Plan amendment (pension benefit inc or dec/ upgrade or degrade scheme);
Curtailment (reduce no of ee);
Intro to DBS for the first time;
Settlement (scrapped scheme /use PA to pay oblg) -> G/L to SOPL

Prospectively; change in AE; acc in CY

Question 10

Under what pension scheme, where er’ bears the risk?

Answer 10

DBS (Contribution in varies)

Question 11

In DCS how to calculate amount to be put in?

Answer 11

(Basic salary + bonus) x fixed %

Question 12

Post employment exp uses what principle?

Answer 12

Matching principle (co receive svcs)

Question 13

Does DCS needs actuary?

Answer 13

NO

Question 14

Double entry for DCS

Answer 14

Dr SOPL
Cr Cash/ CL

Question 15

Under DBS, er holds …… to the ee and meets definition of …… in ias 1

Answer 15

Guarantee;
Liab (creates oblg)

Question 16

Under DBS, Actuaries estimation is based on what method used?

Answer 16

Projecy unit credit method (Cr NCL)

Question 17

Formula for calculating DBO under DBS and why does contribution fluctuates?

Answer 17

Epf % x last drawn (meas uncertainty bcs based on actuaries est)

Question 18

If there is a change in Actuaries’ estimation, how to account for it?

Answer 18

Under ias 8, change in AE; adj prospectively

Question 19

What is the risk under DBS?

Answer 19

Er must ensure that sufficinent FV of PA to meet PV of DBO (risk borne by er)

Question 20

What is asset ceiling test?

Answer 20

When cl pv of DBO< cl fv of PA = net surplus;
Actuary advice : where refund or reduction in contribution is made
BCS contribution cannot be exp to SOPL!!! => distortion of profits

Question 21

What are 3 service cost under DBS that is exp to SOPL?

Answer 21

PSC, CSC & Settlement g/l

Question 22

Components in Cl PV of DBO

Answer 22

OP PV of DBO + int cost (unwind disc) + CSC + PSC - benefit pd + remeas g/l

Question 23

What are the components in ariving Cl FV of PA?

Answer 23

OP FV of PA + int inc (invst earnings where est ×= to actual return) + contribution in - benefit pd + remeas g/l