IAS 19 — The asset ceiling


The IASB decided to revise IAS 19 Employee Benefits (1998) to eliminate inconsistencies and complexities surrounding the accounting for post-employee benefit plans. The main paragraph identified for revision was paragraph 58, which can result in an actuarial loss being deferred on the balance sheet if there is a surplus in the pension fund. The corridor principle was also identified as complex.

In particular, a counter-intuitive result can be produced by the interaction of two aspects of IAS 19 - the option to defer gains and losses in the pension fund and the limit on the amount that can be recognised as an asset (the 'asset ceiling'). Because of the wording of the asset ceiling, a gain is sometimes recognised solely as a result of deferring and amortising an actuarial loss or added past service cost in the current period. Conversely, deferral of actuarial gains sometimes causes a loss to be recognised.


Current status of the project

This project has been completed. An amendment to IAS 19 Employee Benefits was issued on 31 May 2002.


Project milestones

25 February 2002 Exposure draft published Comment deadline 25 February 2002
31 May 2002 Amendment to IAS 19 Employee Benefits issued Effective for accounting periods ending on or after 31 May 2002

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