Reading 16

Question 1

Variable interest entity (VIE)

Answer 1

A special purpose entity that has one or both of the following characteristics:
1. At-risk equity that is insufficient to finance the entity’s activities without additional financial support
2. Equity investors that lack any one of the following:
Decision making rights
The obligation to absorb expected losses
The right to receive expected residual returns

Question 2

Components of periodic pension cost under IFRS

Answer 2

Service cost, net income/expense recognized in P&L

Remeasurements recognized in OCI and not amortized to future P&L

Question 3

Components of periodic pension cost under US GAAP

Answer 3

P&L: current service costs, interest expense on pension obligation, expected return on plan assets (reduces the cost)
Past service costs, actuarial gains/losses, differences between expected and actual return on plan assets recognized in OCI and amortized to future P&L