Appendix 1

Compliance with International Accounting Standards

As at the date of issue of this Standard, compliance with this Standard will ensure conformity in all material respects with International Accounting Standard IAS 19 (revised 2000), Employee Benefits.

Appendix 2

Illustrative Example

Background Information

The following information is given about a funded defined benefit plan. To keep interest computations simple, all transactions are assumed to occur at the year end. The present value of the obligation and the fair value of the plan assets were both RM1,000 at 1 January 20x1. Net cumulative unrecognised actuarial gains at that date were RM140.

In 20X2, the plan was amended to provide additional benefits with effect from 1 January 20X2. The present value as at 1 January 20X2 of additional benefits for employee service before 1 January 20X2 was RM50 for vested benefits and RM30 for non-vested benefits. As at 1 January 20X2, the enterprise estimated that the average period until the non-vested benefits would become vested was three years; the past service cost arising from additional non-vested benefits is therefore recognised on a straight-line basis over three years. The past service cost arising from additional vested benefits is recognised immediately (paragraph 97 of the Standard). The enterprise has adopted a policy of recognising actuarial gains and losses under the minimum requirements of paragraph 94.

Changes in the Present Value of the Obligation and in the Fair Value of the Plan Assets

The first step is to summarise the changes in the present value of the obligation and in the fair value of the plan assets and use this to determine the amount of the actuarial gains or losses for the period. These are as follows:

Limits of the 'Corridor'

The next step is to determine the limits of the corridor and then compare these with the cumulative unrecognised actuarial gains and losses in order to determine the net actuarial gain or loss to be recognised in the following period. Under paragraph 93 of the Standard, the limits of the 'corridor' are set at the greater of:

1. 10% of the present value of the obligation before deducting plan assets; and

2. 10% of the fair value of any plan assets.

These limits, and the recognised and unrecognised actuarial gains and losses, are as follows:

Amounts Recognised in the Balance Sheet and Income Statement, and Related Analyses

The final step is to determine the amounts to be recognised in the balance sheet and income statement, and the related analyses to be disclosed under paragraphs 125(c), (e), (f) and (g) of the Standard. These are as follows:

Movements in the net liability recognised in the balance sheet, to be disclosed under paragraph 125(e):

Actual return on plan assets, to be disclosed under paragraph 125(g):

Note: see example illustrating paragraphs 106-108 for presentation of reimbursements.

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