Company Valuation Under IFRS : Interpreting and Forecasting ...

Chapter Four – Key issues in accounting and their treatment under IFRS
Comprehensive Example
Lamy plc has the following disclosures in its notes regarding its pension fund
on 1st January, 2005:
Pension fund assets (@ fair value) 10,000,000
Pension fund liabilities (@ present value) (10,400.000)
€
(400,000)
There were no unrecognised gains and losses at the start of the year.
The following information relates to the year ended 31 December, 2005:
Current service cost €800,000
Expected long term return on assets 5.1%
Contributions to the fund €1,020,000
Pensions paid €900,000
Actual return on assets €400,000
The present value of liabilities at 31st December, 2005 is estimated to be
€11,000,000. The relevant discount rate is 5%.
What would be the treatment under IAS 19?
Please note:
• Assume actuarial gains/losses are spread over a useful service life of 10
years.
• Experience losses arising from changing actuarial assumptions amount
to €180,000. There were no carried forward experience gains/losses. In
addition for simplicity assume that, in the past, actual and expected
gains had always been identical.
• Ignore the corridor concept.
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