Page 425 - SBR Integrated Workbook STUDENT S18-J19

Answers

Example 3

Defined benefit pension schemes

The liability on the statement of financial position as at 31 December 20X1 is
$24 million ($100m – $76m).

In the statement of profit or loss, Byzantium should recognise an expense for
the current service cost of $5 million.

Byzantium should also charge the net interest component of $0.9 million
(($90m – $72m) × 5%)) to profit or loss.

The re-measurement loss of $6.1 million (W1) should be recognised in other
comprehensive income.

(W1) Reconciliation of net obligation

$m
Balance bfd ($90m – $72m) 18.0

Net interest component 0.9
Service cost component 5.0
Contributions (6.0)
Benefits paid –
Re-measurement component (bal. fig) 6.1

–––––
Balance cfd ($100m – $76m) 24.0
–––––

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