Questions and Answers
What does the statement of net assets available for benefits include?
Net assets, actuarial present value of promised retirement benefits, and excess or deficit
How often may an entity conduct actuarial valuations?
Every three years
What should an entity do if it did not prepare an actuarial valuation at the date of the financial statements?
Use the most recent valuation and disclose its date
How should an entity carry retirement benefit plan investments?
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What must an entity do if the fair value of plan investments is not possible?
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What is the actuarial present value of promised retirement benefits about?
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What does PAS 26 prescribe regarding retirement benefit plans?
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Which of the following is excluded from the scope of PAS 26?
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What type of plans does PAS 26 apply to?
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What are retirement benefit plans also known as?
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In defined contribution plans, what disclosures should be included in the financial statements?
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Under defined benefit plans, what must the financial statements contain?
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Study Notes
Retirement Benefit Plans
- The statement of net assets available for benefits includes the present value of promised retirement benefits, actuarial gains and losses, and the value of plan investments.
Actuarial Valuations
- An entity may conduct actuarial valuations as frequently as it wishes, but at a minimum, it should be done at the date of the financial statements.
Actuarial Valuation Omissions
- If an entity did not prepare an actuarial valuation at the date of the financial statements, it should use the most recent valuation, adjusted for any known changes.
Retirement Benefit Plan Investments
- An entity should carry retirement benefit plan investments at fair value, with changes in fair value recognized in profit or loss.
Fair Value Impossibility
- If the fair value of plan investments is not possible, an entity should disclose the fair value hierarchy level used, the reasons for not using a higher level, and the methods and assumptions used to estimate fair value.
Actuarial Present Value
- The actuarial present value of promised retirement benefits is the cost of providing the benefits, discounted to reflect the time value of money.
PAS 26 Provisions
- PAS 26 prescribes that an entity should recognize the net assets available for benefits in the statement of financial position and the actuarial gains and losses in profit or loss.
PAS 26 Scope Exclusions
- Multi-employer plans are excluded from the scope of PAS 26.
PAS 26 Applicability
- PAS 26 applies to both defined contribution plans and defined benefit plans.
Retirement Benefit Plans Alias
- Retirement benefit plans are also known as pension plans or superannuation plans.
Defined Contribution Plans Disclosures
- In defined contribution plans, the financial statements should include disclosures about the contributions made, the number of participants, and the fair value of plan assets.
Defined Benefit Plans Disclosures
- Under defined benefit plans, the financial statements must contain the present value of promised retirement benefits, actuarial gains and losses, and the value of plan investments.
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Description
This quiz covers the minimum content of financial statements for retirement benefit plans as prescribed by PAS 26. It includes different types of retirement benefit plans such as formal or informal, contributory or non-contributory, funded or unfunded, and defined contribution plan or defined benefit plan.
