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iGAAP Alert: June 2011

IASB amends accounting for post-employment benefits

iGAAP Alert: November 2010

Background

The first main amendment eliminates the current option to spread recognition of actuarial gains and losses, i.e. removing the ‘corridor approach’, and instead requires immediate recognition in other comprehensive income (OCI).

The second main amendment introduces the new components of the change in the defined benefit deficit or surplus recognised:

  • service costs – in profit or loss;
  • net finance cost (i.e. time value of the net deficit or surplus) – in profit or loss; and
  • remeasurements including a) changes in fair value of plan assets that arise from factors other than time value and b) actuarial gains and losses on obligations – in OCI.

As a result, the profit or loss will no longer include an expected return on plan assets; instead there will be a net finance cost in profit or loss. Any actual return above or below the imputed finance income on plan assets will be recorded as part of remeasurements in OCI.

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