Question
Bright Bhd is a public limited company and would like advice in relation to the following transactions. Bright Bhd operates a defined benefit scheme for
- Bright Bhd is a public limited company and would like advice in relation to the following transactions. Bright Bhd operates a defined benefit scheme for its employees. At June 2020, the net pension liability recognised in the statement of financial position was $15 million, excluding an unrecognised actuarial gain of $10 million which Bright Bhd wishes to spread over the remaining working lives of the employees. The scheme was revised on 1 June 2020.
This resulted in the benefits being enhanced for some members of the plan and because benefits do not vest for these members for five years, Bright Bhd wishes to spread the increased cost over that period. However, part of the scheme was to be closed, without any redundancy of employees. Bright Bhd requires advice on how to account for the above scheme including the presentation and measurement of the pension expense.
REQUIRED:
Discuss on the above event and justify the appropriate accounting treatment that should be apply by Bright Bhd. Appropriate examples and quotes from the relevant standard is expected to support your arguments.
(Marks 25)
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