If we have a net pension asset under IFRS how does the calculation for the pension expense work? I presume we do not take the NPA x the discount factor like we would if it is a liability as its a gain not a loss.
Thanks
Your presumption is correct. When a plan is overfunded, think of it as prepaying its future obligations, so the overfunding generates interest income rather than interest expense.
Under IFRS, Net Interest Expense/Income can be broken down into (PBO x r) - (FVPA x r). If FVPA is larger than the PBO, you will have Interest Income, which will reduce the pension expense reported on the P&L.
Just a guess but I would imagine you would still do that, but it would be recorded as interest income. The reason you do that for a pension liability is because the rate on plan assets & rate on PBO are both the discount rate, so it would make sense that you record the income if overfunded.