TABLE OF CONTENTS | $m | |
|---|---|
| Current service cost | 110 |
| Interest cost on scheme liabilities | 20 |
| Expected return on scheme assets | (10) |
| Overall charge to income statement | 120 |
| $m | ||
|---|---|---|
| Scheme assets | ||
| Cash contributions | 100 | |
| Expected return on assets | 10 | |
| Actuarial gain (bal. fig.) | 15 | |
| 125 | ||
| Scheme liabilities | ||
| Current service costs | 110 | |
| Interest costs | 20 | |
| 130 | ||
| Deficit | (5) |
IAS 19 requires a portion of the unrecognised gains and losses at the end of the previous reporting period to be recognised either using the 10% corridor approach or another systematic method including immediate recognition. The company does not have to recognise the actuarial gains as there were no operating gains, but in view of the significance of the extra charge for the pension scheme in the income statement, immediate recognition is the best policy. However, in that case, it must be credited outside the income statement and instead in equity.
The shareholders funds should be reduced by $105m ($120 - 15m) and the double entry is recorded as below:
| Dr | Reserves | 105m | ||
| Cr | Trade receivables | 100m | ||
| Pension liability | 5m |
| $m | $m | |
|---|---|---|
| Non-current assets | ||
| Tangible assets (1,230 + 505 + 256 - 56 - 5) | 1,930 | |
| Intangible assets (72 + 60 = 132 - amortised 84) ( W1) | 48 | |
| 1,978 | ||
| Current assets | ||
| Inventory (300 + 135... |
