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IAS 19 vs.
FAS158, 132R, 87, etc.
versus
The scope is broad and includes wages, vacation or holiday pay, bonus,
termination benefits, etc. as well as retirement plans
Covers full-time, part-time, temporary staff and directors
If it is defined benefit and information is available, account and disclose proportionate share as though it were defined benefit plan of reporting entity
If information is not available, account for it as though it were a defined contribution plan
An employer participating in a multiemployer plan shall recognize as net pension cost the required contribution for the period and shall recognize as a liability any contributions due and unpaid.
IFRS US GAAP Comment
Defined benefit obligation
PBO for pensionAPBO for other (health)
Similar: estimated based on salary at retirement
Plan assets Plan assets Similar
Expected return Expected return Similar
Discount rate Discount rate Similar
Current service cost Service cost Essentially the same
Interest cost Interest cost Essentially the same
Ceiling on defined benefit asset
n/a Nothing comparable in US GAAP
Statement of recognised income and expense (SORIE)
Statement of comprehensive income
Reports portion of changes in net asset/liability not yet recognized in net income
Two optionsRoughly equivalent to pre-
FAS158 GAAP (Assets, PBO, unrecognized amounts netted) with minimum liability or maximum on asset
amountRoughly equivalent to post-
FAS158 Put unrecognized
amounts in equity Report net of plan assets
& obligation (in asset or liability section)
Net presentation: Plan assets and projected benefit obligation are nettedAssets > liability =
noncurrentLiability > assets =
current and noncurrent classification
Unrecognized gains & losses in AOCI
No minimum liability requirement
Current service costInterest costExpected return and any
reimbursement rightsActuarial gains and losses
recognizedPast service cost
recognizedEffect of curtailments or
settlementsEffect of any limit on
balance sheet asset
Current service costInterest costExpected returnAmortization of actuarial
gain or lossAmortization of prior
service cost (and any transition amount)
Effect of curtailments or settlements
Very extensiveMovement in defined
benefit obligationMovement in fair value of
assetsAmounts charged to
operating profitsAssumptionsLots more
Very extensiveReconciliation of PBOReconciliation of plan
assetsAmount recognized in
expenseAmount recognized on
statement of comprehensive income
AssumptionsLots more
Measured as the change in liability resulting from plan amendment
Recognized on straight-line basis over the average period until the benefits become vested
If immediately vested, recognize past service cost immediately
Prior service cost = the cost of retroactive benefits granted in a plan amendmentCould be recognized
immediately but recognition over average remaining service live at amendment is permitted using
Years of service method Straight-line method
The rate shall be determined by reference to market yields at the balance sheet date on high quality corporate bonds. Exception for countries
where there is no deep market in such bonds – then look to government bond rates
The currency and term shall be consistent with the currency and estimated term of the post-employment benefit obligations.
Assumed discount rates shall reflect the rates at which the pension benefits could be effectively settled. Look to rates implicit in
current prices of annuity contracts including information published by the Pension Benefit Guaranty Corporation.
Look to rates of return on high-quality fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits.
The expected return on plan assets is based on market expectations, at the beginning of the period, for returns over the entire life of the related obligation.
The expected return on plan assets reflects changes in the fair value of plan assets held during the period as a result of actual contributions paid into the fund and actual benefits paid out of the fund.
The expected return on plan assets shall be determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets. The market-related value of
plan assets shall be either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than five years
The manner of determining market-related value shall be applied consistently from year to year for each asset class.
Recognize only if entity is demonstrably committed to either: Terminate employment of
an employee or group of employees before the normal retirement date; or
Provide termination benefits as a result of an offer made in order to encourage voluntary redundancy (estimate number who will accept offer)
Contractual termination benefits are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated.
Special voluntary termination benefits are recognized when the employees accept the offer and the amount can be reasonably estimated.
An entity shall recognize the expected cost of short-term employee benefits in the form of compensated absences as follows:
1. Accumulating compensated absences -- when the employees render service that increases their entitlement to future compensated absences
2. Non-accumulating compensated absences -- when the absences occur
A liability should be accrued if all of the following conditions are met:
1.Obligation is attributable to past services
2.Rights vest or can be accumulated
3.Payment is probable4.Amount can be
reasonably estimated
Recommended