Air France–KLM (AF), a French company, prepares its financial statements according to International Financial Reporting Standards. AF’s annual report for the year ended March 31, 2011, which includes financial statements and disclosure notes, is provided with all new textbooks. This material also is included in AF’s “Registration Document 2010–11,” dated June 15, 2011 and is available at www.airfranceklm.com.

Required:

1. Air France did not report past service cost (called prior service cost under U.S. GAAP). If AF revised its pension plan and incurred past service cost, how would the company report that amount if it used the new IFRS guidance described in this chapter? Is that reporting method the same or different from the way we report prior service cost under U.S. GAAP?

2. Look at note 29.1, “Retirement Benefits.” AF incorporates estimates regarding staff turnover, life expectancy, salary increase, retirement age and discount rates. If AF used the new IFRS guidance described in this chapter, how would the company report a change in one of these assumptions? Is that reporting method the same or different from the way we report changes under U.S. GAAP?

3. In its income statement and notes to the statements, AF does not report a single amount that represents net pension cost. If AF used the new IFRS guidance described in this chapter, would the company report a single amount that represents net pension cost? Is that reporting method the same or different from the way we report pension expense under U.S. GAAP?