The projected unit credit method A lump sum benefit is payable on termination of service and equal to 1% of final salary for each year of service. The salary in year 1 is 10,000 and is assumed to increase at 7% (compound) each year. The discount rate used is 10% per year. The following table shows how the obligation builds up for an employee who […]

Replacement award requiring no post-combination service replacing vested acquiree award Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.1 million for awards of Entity B with a fair value at the acquisition date of €1.0 million. No post-combination services are required for the replacement awards and Entity B’s employees had rendered all of the required […]

Attributing benefits to years of service 1. A defined benefit plan provides a lump-sum benefit of 100 payable on retirement for each year of service. A benefit of 100 is attributed to each year. The current service cost is the present value of 100. The present value of the defined benefit obligation is the present value of 100, multiplied by the number of years of […]

Replacement award requiring post-combination service replacing vested acquiree award Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.0 million for awards of Entity B also with a fair value at the acquisition date of €1.0 million. The replacement awards require one year of post-combination service. The awards of Entity B being replaced had a vesting […]

Deficit-clearing future minimum funding requirements when refunds are not available [IFRIC 14.IE9-IE21] An entity has a funding level on the minimum funding requirement basis (which is measured on a different basis from that required under IAS 19) of 95% in Plan C. Under the minimum funding requirements, the entity is required to pay contributions to increase the funding level to 100% over the next three […]

Replacement award requiring post-combination service replacing unvested acquiree award Entity A acquires Entity B and issues replacement awards with a fair value at the acquisition date of €1.0 million for awards of Entity B also with a fair value at the acquisition date of €1.0 million. The replacement awards require one year of post-combination service. When originally granted, the awards of Entity B being replaced […]

Effect of a minimum funding requirement when there is an IAS 19 deficit and the minimum funding contributions payable would not be fully available [IFRIC 14.IE3-8] An entity has a funding level on the minimum funding requirement basis (which is measured on a different basis from that required under IAS 19) of 77% in Plan B. Under the minimum funding requirements, the entity is required […]

Accounting for post-acquisition changes in estimates relating to replacement awards Entity A grants an award of 1,000 shares to each of two employees. The award will vest after three years provided the employees remain in service. At the end of year 2, Entity A is acquired by Entity B which replaces the award with one over its own shares but otherwise on the same terms. […]

Accumulating paid absences An entity has 100 employees, who are each entitled to five working days of paid sick leave for each year. Unused sick leave may be carried forward for one calendar year. Sick leave is taken first out of the current year’s entitlement and then out of any balance brought forward from the previous year (a LIFO basis). At 31 December 2013, the […]

Interaction of IFRS 10, IAS 32 and IFRS 2 (fresh issue of shares) On 1 January 2013, the EBT of ABC plc subscribed for 100,000 £1 shares of ABC plc at £2.50 per share, paid for in cash provided by ABC by way of loan to the EBT. Under local law, these proceeds must be credited to the share capital account up to the par […]