Amongst other changes a new presentation approach was proposed splitting changes in defined benefit obligation and the fair value of plan assets into service cost, finance cost and remeasurement components and presenting:
(a) the service cost component in profit or loss.
(b) the finance cost component, ie net interest on the net defined benefit liability or asset, as part of finance costs in profit or loss.
(c) the remeasurement component in other comprehensive income.
The ED also removes the option to use the ‘corridor’ approach whereby IAS 19 permits entities to recognise all gains and losses when they occur, or to leave actuarial gains and losses unrecognised if they are within a ‘corridor’ and to defer recognition of actuarial gains and losses outside the corridor.
In responding to the IASB consultation the ACT has broadly welcomed the proposed changes since in the long run they should lead to financial statements that are more consistent and which include information that more faithfully represents an entity’s financial position, financial performance and cash flows. However the ACT notes that in moving to the proposed new accounting some companies will suffer a significant impact in how their numbers are presented.
