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iGAAP Alert: May 2010

Closing the corridor

iGAAP Alert: May 2010



The Exposure Draft proposes a number of changes. The most significant is the proposal to eliminate the current option to spread recognition of actuarial gains and losses instead requiring immediate recognition,i.e. removing the ‘corridor approach’.

The ED further proposes a new single presentation for changes in the defined benefit deficit or surplus.Changes are disaggregated into the following components and are presented:

  • 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 other comprehensive income. As a result of the above proposals, 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.

For more information, read our iGAAP Alert: May 2010.


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