Question

The Kissel Trucking Company Inc. has a defined benefit pension plan for its employees. At December 31, Year 1, the following information is available regarding Kissel's plan:

Fair value of plan assets $30,000,000
Present value of defined benefit obligation 38,000,000
Service costs 4,000,000
Interest costs 1200,000
Actuarial gains 150,000
Past service costs 375,000

Required:
Determine the amount that Kissel will report on the balance sheet as of December 31, Year 1, for this pension plan under IFRS.

Answer 1

Answer:

Under IFRS, net defined benefit liability is reported in balance sheet when Present value of defined benefit obligation (PVDBO) exceeds Fair value of plan assets(FVPA) which results in deficits.

In this case, PVDBO exceeds FVPA, then the difference betwen the two ix the net defined benefit liability.

Difference of PVDBO and FVPA = $38,000,000 - $30,000,000 = $8,000,000. Hence, net defined benefit liability reported in the balance sheet is $8,000,000.