NB operates a defined benefit pension plan for its employees. At 1 April 20X3, the fair value
Question:
NB operates a defined benefit pension plan for its employees. At 1 April 20X3, the fair value of the pension plan assets was $8,200,000 and the present value of the pension plan liabilities was $8,500,000. The actuary estimated that the service cost for the year to 31 March 20X4 was $2,100,000. The pension plan paid $500,000 to retired members and NB paid $1,900,000 in contributions to the pension plan in the year to 31 March 20X4. The actuary estimated that the relevant discount rate for the year to 31 March 20X4 was 6 per cent. On 31 March 20X4, NB announced improvements to the benefits offered by the pension plan to all of its members. The actuary estimated that the past service cost associated with these improvements was $2 million. At 31 March 20X4 the fair value of the pension plan assets was $10,200,000 and the present value of the pension plan liabilities (including the past service costs) was $12,500,000.
Required:
In accordance with IAS 19 Employee Benefits:
(i) Calculate the net actuarial gain or loss (stating which) that will be included in NB’s other comprehensive income for the year ended 31 March 20X4.
(ii) Calculate the net pension asset or liability (stating which) that will be included in NB’s statement of financial position as at 31 March 20X4.
Step by Step Answer:
International Financial Reporting And Analysis
ISBN: 9781473766853
8th Edition
Authors: David Alexander, Ann Jorissen, Martin Hoogendoorn