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IAS 19 Disclosures Example: Reconciliation to Assets and Liabilities recognized on the balance sheet

In the previous post we looked at IAS 19 Disclosures related to the reconciliation in the present value of defined benefit obligation and fair value of assets during the year. In this post we look at the disclosure showing the reconciliation of the actuarial liability and fair value of assets to the assets and liabilities that are recognized in the balance sheet.

a)      A reconciliation of the present value of the defined benefit obligation and the fair value of the plan assets to the assets and liabilities recognized in the balance sheet. In order to prepare this reconciliation we first need to consider the movement in unrecognized actuarial gains and loss during 2010. For our example this is determined as follows:

 Movement in Unrecognized Actuarial Gain (Loss) During the year ended12/31/2010
1Unrecognized Actuarial Gain (Loss) as at 31/12/2009        500.00
2Actuarial Gain (Loss) on Obligation        674.96
3Actuarial Gain (Loss) on Assets

-40.00

4Net Gain (Loss) as at 31/12/2010; (2)+(3)        634.96
5Actuarial Gain (Loss) to be recognized for the year ended 31/12/2010    0.00  
6Unrecognized Actuarial Gain (Loss) as at 31/12/2010; (1)+(4)-(5)

-1,134.96

Where Item 5 was calculated in last year’s valuation (2009) as follows using the corridor limit approach:

1Present value of Funded Gratuity Obligation- Actuarial Liability as at 31-12-2009     8,867.77
2Fair Value of Plan Assets as at 31-12-2009     8,000.00
3Greater of (1) and (2)     8,867.77
410% Corridor        886.78
5Net cumulative unrecognized actuarial gain        500.00
6Excess of (5) over (4)               –  
7Average expected remaining working lives (years)          30
8Amortization of Gain (Loss) to be recognized in the following year beginning 1st January 2010; (6)/(7)               0.00  

The reconciliation of the present value of defined benefit obligation and fair value of assets to the assets and liabilities to be recognized in the balance sheet is as follows:

 Asset (Liability) to be recognized in the Balance Sheet as at

12/31/2010

1Present value of Funded Gratuity Obligation- Actuarial Liability as at 31-12-2010

   10,454.09

2Fair Value of Plan Assets

   10,000.00

3Funded Status [(Deficit)/ Surplus]; (2)-(1)

-454.09

4Unrecognized Actuarial (gain) loss

-1,134.96

5Asset (Liability) to be recognized as at 31/12/2010; (3)+(4)

-1,589.05

 In this post we reviewed the IAS 19 disclosure with shows how to determine the assets (liabilities) to be recognized in the balance sheet. In the following post we see the disclosure pertaining to the gratuity expense that has to be recognized in the profit and loss statement.

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