Page 291 - F1 Integrated Workbook STUDENT 2018

IAS 19 Employee benefits

Solution
$m
Net liability brought forward (35)
Net interest cost (10% × 35) (3.5)
Current service cost (45)
Additional benefits granted (past service costs) (10)
Pension contributions paid 40
Actuarial gain (bal fig) 13.5
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Net liability carried forward (40)
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You were given the net pension liability at the start and end of the year and
needed to use the double entries listed above to calculate the balancing figure
for the actuarial gain. This is the gap between what the actuary expected at
the start of the year and what actually happened by the end of the year.

If benefits paid had been provided in the question no adjustment is required
because the entries reduce pension assets and reduce pension liabilities,
thereby having no effect on the net pension liability.

Statement of financial position (extract) at 31 March 20X3
$m
Net pension liability 40

Statement of profit or loss and other comprehensive income (extracts) for the
year ended 31 March 20X3
$m
Statement of profit or loss
Service cost component (45 + 10) (55)
Net interest component (3.5)
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Net effect on profit (58.5)
Items that will not be reclassified to profit or loss:
Re-measurement component – gain 13.5
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Net effect on total comprehensive income (45)
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