Remeasurement IFRS (Pensions)

A little confused on why remeasurement is not being accounted for in the following question:

PBO 250

FV Assets 290

UAG 20

Service Cost 30

Sponsor Contributions 35

Benefits paid to reitrees 20

Actual Return Plan Assets 5

Expexted Return plan assets 30

discount 10%

Service life 20Y

Under IFRS what is the pension expense?

I calculate as:

Service cost (30) + Int Expense (290-250 = NPA of 40. Therefore 40x0.10=4 GAIN) + Remesaurement (Difference between Actual & discount return plan assets = 5 - 29 = -24)

Therefore overall cost is

30 - 4 -24 = 2 (which obviously doesnt look right)

The answer has suggested we only take the Service cost and net interest.

therefore 30-4=26 final answer.

Why is the remeasurement not included here?

Have a look at this table of IFRS vs GAAP differences.

Under IFRS remeasurement goes to OCI and is never amortized (so it never appears in P&L pension cost).

It’s important that you differentiate between pension COST and pension EXPENSE. They’re not the same. Pension cost is everything. Pension expense is only what gets reported on the income statement (P&L), which is different under IFRS vs US GAAP. As krok mentioned, remeasurement doesn’t hit the P&L under IFRS. Under US GAAP, it is usually initially recognized in OCI, then amortized to the P&L via the corridor method.

Ah thats it. The small subtly. So if we are to calculate the cost we will include all components. Expense we ignore anything through OCI on either GAAP or IFRS.

Thanks both

So in order words, ppc in P&L = pension expense.