IAS 19 vs. FAS158, 132R, 87, etc.

versus

The scope is broad and includes wages, vacation or holiday pay, bonus, termination benefits, etc. as well as retirement plans

Covers full-time, part-time, temporary staff and directors

 If it is defined benefit and

information is available, account and disclose proportionate share as though it were defined benefit plan of reporting entity If information is not available, account for it as though it were a defined contribution plan

An employer participating in

a multiemployer plan shall recognize as net pension cost the required contribution for the period and shall recognize as a liability any contributions due and unpaid.

IFRS

US GAAP

Comment

Defined benefit obligation

Plan assets Expected return Discount rate Current service cost Interest cost Ceiling on defined benefit asset Statement of recognised income and expense (SORIE)

PBO for pension APBO for other (health)

Plan assets Expected return Discount rate Service cost Interest cost n/a Statement of comprehensive income

Similar: estimated based on salary at retirement

Similar Similar Similar Essentially the same Essentially the same Nothing comparable in US GAAP Reports portion of changes in net asset/liability not yet recognized in net income

 Two options Roughly equivalent to pre-

Net presentation: Plan

Assets > liability =

FAS158 GAAP (Assets, PBO, unrecognized amounts netted)

with minimum liability or maximum on asset amount

assets and projected benefit obligation are netted

noncurrent Liability > assets = current and noncurrent classification

Roughly equivalent to post-

FAS158

Put unrecognized amounts in

equity Report net of plan assets & obligation (in asset or liability section)

Unrecognized gains & losses

in AOCI No minimum liability requirement

 Current service cost Interest cost Expected return and any

Current service cost Interest cost Expected return Amortization of actuarial

reimbursement rights Actuarial gains and losses recognized Past service cost recognized Effect of curtailments or settlements Effect of any limit on balance sheet asset

gain or loss Amortization of prior service cost (and any transition amount) Effect of curtailments or settlements

 Very extensive Movement in defined benefit

Very extensive Reconciliation of PBO Reconciliation of plan assets Amount recognized in

obligation Movement in fair value of assets Amounts charged to operating profits Assumptions Lots more

expense Amount recognized on statement of comprehensive income Assumptions Lots more

10% of the present value of the defined benefit obligation 10% of the fair value of any plan assets

 Measured as the change in

liability resulting from plan amendment Recognized on straight-line basis over the average period until the benefits become vested If immediately vested, recognize past service cost immediately

Prior service cost = the cost

of retroactive benefits granted in a plan amendment

Could be recognized

immediately but recognition over average remaining service live at amendment is permitted using

Years of service method Straight-line method

 The rate shall be determined by

reference to market yields at the balance sheet date on high quality corporate bonds.
Exception for countries where

Assumed discount rates shall

reflect the rates at which the pension benefits could be effectively settled.

Look to rates implicit in current

there is no deep market in such bonds then look to government bond rates The currency and term shall be consistent with the currency and estimated term of the post-employment benefit obligations.

prices of annuity contracts including information published by the Pension Benefit Guaranty Corporation. Look to rates of return on highquality fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits.

 The expected return on plan

The expected return on plan

assets is based on market expectations, at the beginning of the period, for returns over the entire life of the related obligation. The expected return on plan assets reflects changes in the fair value of plan assets held during the period as a result of actual contributions paid into the fund and actual benefits paid out of the fund.

assets shall be determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets.
The market-related value of plan

assets shall be either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than five years The manner of determining market-related value shall be applied consistently from year to year for each asset class.

The enterprise will be demonstrably committed to a termination when, and only when, it has a detailed formal plan for the termination and is without realistic possibility of withdrawal. Where termination benefits fall due after more than 12 months after the balance sheet date, they should be discounted

 Recognize only if entity is

demonstrably committed to either:

Terminate employment of

Contractual termination

an employee or group of employees before the normal retirement date; or Provide termination benefits as a result of an offer made in order to encourage voluntary redundancy (estimate number who will accept offer)

benefits are recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated. Special voluntary termination benefits are recognized when the employees accept the offer and the amount can be reasonably estimated.

 An entity shall recognize the

expected cost of short-term employee benefits in the form of compensated absences as follows: 1. Accumulating compensated absences -- when the employees render service that increases their entitlement to future compensated absences 2. Non-accumulating compensated absences -when the absences occur

A liability should be accrued

if all of the following conditions are met: 1. Obligation is attributable to past services 2. Rights vest or can be accumulated 3. Payment is probable 4. Amount can be reasonably estimated