Your document headline

Total accounts payable 41,000
Accrued expenses 21,000
Total liabilities 62,000
Net assets available for benefits 89,000
DEFINED BENEFIT PLANS
Defined benefit plans are those plans where the benefits are guaranteed amounts and amounts to be paid as retirement benefits are determined by reference to a
formula, usually based on employees’ earnings and/or number of years of service. The critical factors are thus the retirement benefits that are fixed or determinable,
without regard to the adequacy of assets that may have been set aside for payment of the benefits. This clearly is different from the way defined contribution plans
work; they provide the employees, upon retirement, amounts that have been set aside, plus or minus investment earnings or losses that have been accumulated thereon,
however great or small that amount may be.
IAS 26 requires that the report of a defined benefit plan should contain one of the two following statements, either
1. A statement that shows
a. The net assets available for benefits
b. The actuarial present value of promised retirement benefits, distinguishing between vested and nonvested benefits
c. The resulting excess or deficit
or
2. A statement of net assets available for benefits including either
a. A note disclosing the actuarial present value of promised retirement benefits, distinguishing between vested and nonvested benefits, or
b. A reference to this information in an accompanying actuarial report
IAS 26 recommends, but does not mandate, that in each of the three formats just described, a report of the trustees in the nature of a management or directors’ report
and an investment report may also accompany the statements.
The Standard does not make it incumbent upon the plan to use annual actuarial valuations. If an actuarial valuation has not been prepared on the date of the report,
the most recent valuation should be used as the basis for preparing the financial statement. The Standard does, however, require that the date of the actuarial valuation
used should be disclosed. Actuarial present values of promised benefits should be based either on current or projected salary levels; whichever basis is used should
also be disclosed. Furthermore, the effect of any changes in actuarial assumptions that had a material impact on the actuarial present value of promised retirement
benefits should also be disclosed. The report should explain the relationship between actuarial present values of promised benefits, the net assets available for benefits,
and the policy for funding the promised benefits.
As in the case of defined contribution plans, investments of a defined benefit plan should be carried at fair value, which for marketable securities would be “market
values.”
Example
Examples of the alternative types of reports prescribed for a defined benefit plan follow.
1. Statement of net assets available for benefits:
Excellent Inc. Defined Benefit Plan
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, ACTUARIAL
PRESENT VALUE OF ACCUMULATED RETIREMENT
BENEFITS AND PLAN EXCESS OR DEFICIT
December 31, 2009
(in thousands of US $)
Assets
Investments at fair value:
US government securities 155,000
US municipal bonds 35,000
US equity securities 35,000
EU equity securities 35,000
US debt securities 25,000
EU corporate bonds 25,000