IFRIC 14 Interpretation of IAS 19 – Defined Benefit Assets and Minimum Funding Requirements

Interpretation on Defined Benefit Assets and Minimum Funding Requirements

The International Financial Reporting Interpretations Committee (IFRIC) has issued an Interpretation on IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. It provides some guidance about how to assess the limit in IAS 19. Specifically, how much of the surplus employee benefit can be recognized as an asset. Also, the guidance explains how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement. The good thing here is that it will set a standard practice that ensures entities recognize this on a consistent basis.

Additional liabilities do not need be recognized by the employer under IFRIC 14, unless the contributions payable under the minimum funding requirement cannot be returned to the company. The most affected countries will be those that have a minimum funding requirement and restrictions on a company’s ability to get refunds or reduce contributions.

Accounting made easy, for FREE!

Access the contact form and send us your feedback, questions, etc. We are always welcome to help someone out. You can also contact us if you wish to submit your writing, cartoons, jokes, etc. and we will consider posting them to share with the world! The Facebook and LinkedIn groups are also good areas to find people interested in accounting like yourself, don’t hesitate to join as everyone of all levels are welcome to become part of the community.

Are You Ready to Take Your Accounting Skills to the Next Level on the Information Highway?

How Can We Help?