Page 129 - SBR Integrated Workbook STUDENT S18-J19
P. 129
Employee benefits
Example 4
Asset ceiling
Bloom operates a defined benefit pension scheme. The following details relate
to the pension scheme in the year ended 31 December 20X1:
$m
Present value of the obligation at 31 December 20X1 107
Present value of the obligation at 1 January 20X1 95
Fair value of plan assets at 31 December 20X1 124
Fair value of plan assets at 1 January 20X1 110
Current service cost 7
Contributions into the scheme by Byzantium 8
Pension benefits paid during the year 3
The interest rate on good quality corporate bonds at the start of the year was
6%. Bloom identified an asset ceiling at the beginning and the end of the year
of $10 million – the present value of expected refunds from the scheme.
How should the scheme be accounted for in the year ended 31
December 20X1?
123
