Calculation of the actuarial gain and losses, Financial Accounting

Calculation of the actuarial gain/losses in year to 31 December 2010

FV of plan assets

PV of plan liabilities



Opening balance



Service cost


Interest cost (8% x $2,900,000)


Expected return (5% x $2,600,000)


Past service cost


Benefits paid







Actuarial gain on assets


Actuarial loss on liabilities


Closing balance




(b) SARs are an example of a cash-settled share-based transaction and, in accordance with IFRS 2 Share-based payments, are primarily measured at fair worth at the grant date and consequently premeasured to fair value at each year-end. The liability is premeasured and any difference is charged to the income statement as an expense. (This description is not a required part of the answer but is included to aid understanding.)


Eligible employees (300-32-35) = 233

Equivalent cost of SARs = 233 employees x 1,000 rights x FV$8 = $1,864,000

Allocate over 3 year vesting period $1,864,000/3 = $621,333 equivalent charge to the income statement in the first year.


Eligible employees (300-32-28-10) = 230

Equivalent cost of SARs = 230 employees x 1,000 rights x FV$12 = $2,760,000

Cumulative amount to be recognised as a liability = $2,760,000 x 2/3 years = $1,840,000

Less amount previously recognised = $1,840,000-621,333 = $1,218,667

The expense will be recorded as:

Dr staff costs $1,218,667

Cr liability $1,218,667

Posted Date: 5/29/2013 4:00:42 AM | Location : United States

Related Discussions:- Calculation of the actuarial gain and losses, Assignment Help, Ask Question on Calculation of the actuarial gain and losses, Get Answer, Expert's Help, Calculation of the actuarial gain and losses Discussions

Write discussion on Calculation of the actuarial gain and losses
Your posts are moderated
Related Questions
You are evaluating a project which costs $720,000, has a four-year life, and no salvage value. Depreciation is straight-line and the half year rule does not apply. Sales are projec

What is the sales price of common stock when it was issued?

On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows: Common stock, par value $10; authorized 30,000 shares; issued and outstanding 9,000 shares $

GOODS AT BRANCH MARKED DOWN, OR MARKED UP BY AN ADDITIONAL AMOUNT If goods at the branch are not selling well, branch could be authorized by the Head office to mark-down the good

Uncertainty concerning the business It has been recognised in a variety of studies that the problem of adequately financing SMEs is a problem of uncertainty. A defining feature

Closing Entries: Expenses Below is a list of accounts with corresponding ending balances. Account: Account Balance a.Insurance Expense: $1,300 b.Cash: 750 c.Accounts Receivable: 4,

Illustration-statement of Changes in Net Assets-pension fund (a) What meetings of creditors must be held and for what purpose in the course of a creditors’ voluntary winding up

Efficiency Ratios - These ratios include Receivables Turnover, Inventory Turnover, Asset Turnover and Net Working Capital Turnover ratios. Efficiency ratios demonstrate the utili

A huge number of variations of ROT are determined in practice, based upon how "Investment" and "Return" are explained "Investment" may be explained to comprise any of the subsequen

Procedure after Winding-up Order 1. A copy of the order must be filed by the company with the registrar s.227. 2. The company must deliver a statement of affairs to the Offici