AS15 Revised

Acco u ntin g S ta n dard ( A S) 1 5 ( r ev is e d 2 0 05 ) E m plo yee B en efit s C on te n ts O BJE C TIV E SC O PE Para gra p hs 1 -6 D EFIN IT IO NS 7 SH ORT-T ER M E M PL O YEE B EN EFIT S 8-2 3 R eco gn it io n a n d M ea su re m en t 1 0 -2 2 A ll S hort- te rm E m plo yee B en efits 10 S hort- te rm C om pen sa te d A bse n ce s 11 -1 6 P ro fit - s h arin g a n d B on us P la n s 17 -2 2 D is c lo su re 2 3 P O ST -E M PL O YM EN T B EN EFIT S: D EFIN ED C O NTR IB U TIO N P L A NS A ND D EFIN ED B EN EFIT P L A N S 2 4 -4 3 M ult i- e m plo y er P la n s 2 9 -3 6 S ta te P la n s 3 7 -3 9 In su red B en efit s 4 0 -4 3 P O ST -E M PL O YM EN T B EN EFIT S: D EFIN ED C O NTR IB U TIO N P L A NS 4 4 -4 8 R eco gn it io n a n d M ea su re m en t 4 5 -4 6 D is c lo su re 4 7 -4 8 P O ST -E M PL O YM EN T B EN EFIT S: D EFIN ED B EN EFIT P L A NS 49-1251 26 R eco gn it io n a n d M ea su re m en t 5 0 -6 3 A cc o unti n g f o r t h e O blig atio n u nder a D efin ed B en efit P la n 53 -5 4 B ala n ce S heet 55 -6 0 S ta te m en t o f P ro fit a n d L oss 61 -6 2 Ill u str a tiv e E xam ple 63 2 R eco gn it io n a n d M ea su re m en t: P rese n t V alu e o f D efin ed B en efit O bli g atio n s a n d C urr en t S erv ic e C ost 6 4 -9 9 A ctu aria l V alu atio n M eth od 65 -6 7 A tt r ib utin g B en efit t o P erio ds o f S erv ic e 68 -7 2 A ctu aria l A ss u m ptio n s 73 -7 7 A ctu aria l A ss u m ptio n s: D is c o unt R ate 78 -8 2 A ctu aria l A ss u m ptio n s: S ala rie s, B en efits a n d M ed ic al C osts 83 -9 1 A ctu aria l G ain s a n d L osse s 92 -9 3 P ast S erv ic e C ost 94 -9 9 R eco gn it io n a n d M ea su re m en t: P la n A ss e ts 1 00-1 09 F air V alu e o f P la n A sse ts 100-1 02 R eim burs e m en ts 103-1 06 R etu rn o n P la n A sse ts 107-1 09 C urta ilm en ts a n d S ettle m en ts 1 10-1 16 P re se n ta tio n 1 17-1 18 O ffs e t 117 F in an cia l C om po nen ts o f P ost- e m plo ym en t B en efit C osts 118 D is c lo su re 1 19-1251 26 Ill u str a tiv e D is c lo su re s 1 251 26 O TH ER L O NG -T ER M E M PL O YEE B EN EFIT S 126 1 27-1311 32 R eco gn it io n a n d M ea su re m en t 1 28 1 29-1301 31 D is c lo su re 13 11 32 T ER M IN A TIO N B EN EFIT S 132 1 33-1411 42 R eco gn it io n 133 1 34-1371 38 M ea su re m en t 1 381 39 D is c lo su re 1 39 1 40-1411 42 T R A NSIT IO NAL P R O VIS IO NS 142 1 43-1451 46 3 E m plo yee B en efit s o th er t h an D efin ed B en efit P la n s a n d T erm in atio n B en efit s 1 421 43 D efin ed B en efit P la n s 1 431 44-1441 45 T erm in atio n B en efit s 1 451 46 A PPE N DIC ES A . Illu str a tiv e E xam ple B . Illu str a tiv e D is c lo su res C . Com paris o n w it h I A S 1 9, E m plo yee B en efit s 4 A cco u ntin g S ta n dard ( A S) 1 5 ( r ev is e d 2 0 05 )* E m plo yee B en efit s (T his A cco u ntin g S ta ndard i n clu d es p ara gra phs s e t i n b old i ta lic t y p e a nd p la in t y p e, w hic h h ave e q ual a uth ority . P ara gra phs in b old ita li c ty p e in dic a te th e m ain p rin cip le s. T his A cc o unti n g S ta ndard sh o uld b e re a d in th e c o nte x t o f it s o bje cti v e a nd th e P re fa ce to th e S ta te m en ts o f A cc o unti n g S ta ndard s 1.) A cco untin g S ta n dard (A S) 1 5, E m plo yee B en efit s (re v is e d 2 005), is su ed b y th e C ouncil o f th e I n stit u te o f C harte re d A cc o unta n ts o f In dia , c o m es in to e ffe c t in re sp ect o f a c co untin g p erio ds c o m m en cin g o n o r a fte r A pril 1 , 2 006 a n d th e d ate to b e a n nounce d b y th e C ouncil in d ue co urs e . T his S ta n dard is m an dato ry i n n atu re2 f ro m t h at d ate:. ( a ) in it s e n ti r e ty , f o r th e e n te rp ris e s w hic h f a ll in a n y o ne o r m ore o f th e f o ll o w in g cate g o rie s, a t a n y t im e d u rin g t h e a cco un tin g p erio d: (i) Ente rp ris e s w hose e q uity o r d eb t s e c u rit ie s a re li s te d w heth er in In dia o r o uts id e I n dia . (ii) Ente rp ris e s w hic h are in th e pro cess of lis ti n g th eir eq uit y or deb t s e c u riti e s a s e v id en ced b y t h e b oard o f d ir e cto rs ’ r e so lu tio n i n t h is r e g ard . (iii ) Ban ks i n clu din g c o -o pera ti v e b an ks. (iv ) Fin an cia l i n sti tu ti o ns. (v ) Ente rp ris e s c arry in g o n i n su ra n ce b usin ess. (v i) All co m merc ia l, in dustr ia l an d busin ess re p orti n g en te rp ris e s, w hose tu rn over f o r th e im m ed ia te ly p re ce d in g a cc o unti n g p erio d o n th e b asis o f a u d ite d fin an cia l sta te m en ts ex cee d s R s. 5 0 cro re . T urn over d o es n ot in clu de ‘ o th er i n co m e’. * O rig in all y is su ed in 1995 an d tit le d as ‘A cco u ntin g fo r R etir e m en t B en efit s in th e F in an cia l S ta te m en ts of E m plo yers ’. A S 1 5 (re v is e d 2 00 5) w as o rig in all y p u blis h ed in th e M arc h 2 00 5 is su e o f th e In stit u te ’s Jo u rn al. S ub se q uen tl y , th e In stit u te o f C harte re d A cco u nta n ts o f In dia (IC A I), in J a n uary 2 0 06 , m ad e L im it e d R ev is io n to A S 1 5 (re v is e d 2 0 05) p rim aril y w ith a v ie w to b rin g th e d is c lo su re re q uir e m en ts o f th e sta n dard re la tin g to th e d efin ed ben efit pla n s in li n e w ith th e co rr e sp on din g In te rn ati o nal A cc o un tin g Sta n d ard (IA S) 19, E m plo yee B en efits ; to c la rif y th e a p p li c ati o n o f th e tr a n sitio n al p ro v is io n s; a n d to p ro vid e re la x atio n / e x em ptio ns to th e S m all a n d M ed iu m -s iz ed E nte rp ris e s ( S M Es). T his L im it e d R ev is io n h as b een d uly in co rp ora te d in A S 1 5 ( re v is e d 2 005 ). T he c h an ges m ad e th ro u gh th e L im it e d R ev is io n a re g iv en in th e m ark ed fo rm (a d ditio n s a re s h ow n a s u n derli n ed a n d d ele tio n s a re s h ow n i n s tr ik e-th ro u gh f o rm ). 1 A tte n tio n is sp ecif ic ally d ra w n to p ara g ra p h 4 .3 o f th e P re fa ce, ac co rd in g to w hic h ac co un tin g sta n dard s are i n te n ded t o a p p ly o nly t o i t e m s w hic h a re m ate ria l. 2 T his im plie s th at, w hile d is c h arg in g th eir a tt e st fu n ctio n , it w ill b e th e d uty o f th e m em bers o f th e In sti tu te to e x am in e w heth er th is A cco u nti n g S ta n dard is c o m plie d w it h in th e p re se n ta tio n o f fin an cia l s ta te m en ts c o v ere d b y t h eir a u d it . In th e e v en t o f a n y d ev ia ti o n fro m th is A cco u ntin g S ta n d ard , it w il l b e th eir d uty to m ak e a d eq uate d is c lo su re s i n t h eir a u d it r e p orts s o t h at t h e u se rs o f f in an cia l s ta te m en ts m ay b e a w are o f s u ch d ev ia tio ns. 5 (v ii) All co m merc ia l, in d ustr ia l an d busin ess re p ortin g en te rp ris e s hav in g b orro w in gs, in clu din g p ublic d ep osits , in e x cess o f R s. 1 0 c ro re a t a n y ti m e d urin g t h e a c co untin g p erio d. (v iii ) Hold in g a n d su bsid ia ry e n te rp ris e s o f a n y o ne o f th e a b ove a t a n y tim e d urin g t h e a c co untin g p erio d. (b ) in i ts e n tir e ty , e x cep t t h e f o llo w in g, f o r e n te rp ris e s w hic h d o n ot f a ll in a n y o f t h e cate g o rie s in (a ) a b ove a n d w ho se a v era g e n um ber o f p ers o ns e m plo yed d urin g th e y ea r i s 5 0 o r m ore . (i) para g ra p hs 11 to 16 of th e sta n dard to th e ex te n t th ey dea l w ith re c o gn itio n an d m easu re m en t o f sh ort- te rm ac cu m ula tin g co m pen sa te d ab se n ces whic h are non -v esti n g (i.e ., sh ort- te rm acc u m ula ti n g co m pen sa te d a b se n ce s in re sp ec t o f w hic h e m plo yee s a re n ot e n ti t le d to ca sh p ay m en t f o r u nu se d e n tit le m en t o n l e av in g); (ii) para g ra p hs 4 6 a n d 1 39 o f th e S ta n dard w hic h d eal w ith d is c o untin g o f a m ounts th at fa ll d ue m ore th an 1 2 m onth s a fte r th e b ala n ce s h eet d ate ; a n d (iii ) re c o gn itio n a n d m easu re m en t p rin cip le s l a id d ow n i n p ara g ra p hs 5 0 t o 1 16 an d p re se n ta tio n a n d d is c lo su re r e q uir e m en ts la id d ow n i n p ara g ra p hs 1 17 to 1 23 o f th e S ta n dard in r e sp ect o f a c co untin g f o r d efin ed b en efit p la n s. H ow ev er, su ch e n te rp ris e s sh ould a c tu aria lly d ete rm in e a n d p ro vid e fo r th e a cc ru ed l ia b il ity i n r e sp ect o f d efin ed b en efit p la n s a s f o llo w s:
The m eth od u se d fo r a c tu aria l v alu atio n sh ould b e th e P ro je cte d U nit C re d it M eth od.
The dis c o unt ra te use d sh ould be dete rm in ed by re fe re n ce to m ark et y ie ld s a t t h e b ala n ce s h eet d ate o n g o vern m en t b on ds a s p er p ara g ra p h 7 8 o f t h e S ta n dard . Such e n te rp ris e s sh ould d is c lo se a ctu aria l a ssu m pti o ns a s p er p ara g ra p h 120(l) o f t h e S ta n dard . (iv ) re c o gn itio n a n d m ea su re m en t p rin cip le s la id d ow n in p ara g ra p hs 1 29 to 131 o f t h e S ta n dard i n r e sp ect o f a cco untin g f o r o th er l o ng-te rm e m plo yee b en efit s . H ow ev er, su ch en te rp ris e s sh ould actu aria ll y dete rm in e an d pro vid e fo r th e a ccru ed lia b il ity in re sp ect o f o th er lo n g-te rm e m plo yee b en efit s a s f o llo w s:
The m eth od u se d fo r a c tu aria l v alu atio n sh ould b e th e P ro je cte d U nit C re d it M eth od.
The dis c o unt ra te use d sh ould be dete rm in ed by re fe re n ce to m ark et y ie ld s a t t h e b ala n ce s h eet d ate o n g o vern m en t b on ds a s p er p ara g ra p h 7 8 o f t h e S ta n dard . (c ) in i ts e n tir e ty , e x cep t t h e f o llo w in g, f o r e n te rp ris e s w hic h d o n ot f a ll in a n y o f t h e cate g o rie s in (a ) a b ove a n d w ho se a v era g e n um ber o f p ers o ns e m plo yed d urin g th e y ea r i s l e ss t h at 5 0. 6 (i) para g ra p hs 11 to 16 of th e sta n dard to th e ex te n t th ey dea l w ith re c o gn itio n an d m easu re m en t o f sh ort- te rm ac cu m ula tin g co m pen sa te d ab se n ces whic h are non -v esti n g (i.e ., sh ort- te rm acc u m ula ti n g co m pen sa te d a b se n ce s in re sp ec t o f w hic h e m plo yee s a re n ot e n ti t le d to ca sh p ay m en t f o r u nu se d e n tit le m en t o n l e av in g); (ii) para g ra p hs 4 6 a n d 1 39 o f th e S ta n dard w hic h d eal w ith d is c o untin g o f a m ounts th at fa ll d ue m ore th an 1 2 m onth s a fte r th e b ala n ce s h eet d ate ; a n d (iii ) re c o gn itio n a n d m easu re m en t p rin cip le s l a id d ow n i n p ara g ra p hs 5 0 t o 1 16 an d p re se n ta tio n a n d d is c lo su re r e q uir e m en ts la id d ow n i n p ara g ra p hs 1 17 to 1 23 o f th e S ta n dard in r e sp ect o f a c co untin g f o r d efin ed b en efit p la n s. S uch e n te rp ris e s m ay c a lc u la te a n d a cco u nt f o r th e a c cru ed l ia b ilit y u nd er th e d efin ed b en efit p la n s b y r e fe re n ce to s o m e o th er r a tio nal m eth od , e .g ., a m eth od b ase d o n th e a ssu m ptio n th at su ch b en efits a re p ay ab le to a ll e m plo yees a t t h e e n d o f t h e a cco u ntin g y ear. (iv ) re c o gn itio n a n d m ea su re m en t p rin cip le s la id d ow n in p ara g ra p hs 1 29 to 131 o f t h e S ta n dard i n r e sp ect o f a cco untin g f o r o th er l o ng-te rm e m plo yee b en efit s . S uch en te rp ris e s m ay ca lc u la te an d ac co unt fo r th e accru ed li a b ilit y u nd er t h e o th er l o n g-te rm e m plo yee b en efits b y r e fe re n ce t o s o m e o th er ra tio nal m eth od, e .g ., a m eth od b ase d o n th e a ssu m pti o n th at s u ch ben efit s a re p ay ab le t o a ll e m plo yee s a t t h e e n d o f t h e a cc o unti n g y ear. W here a n e n te rp ris e h as b een c o vere d in a n y o ne o r m ore o f th e c ate g o rie s in ( a ) a b o ve an d s u bse q uen tly , c ease s to b e s o c o vere d , th e e n te rp ris e w ill n ot q ualif y f o r e x em ptio ns sp ec if ie d i n ( b ) a b ove, u ntil t h e e n te rp ris e c ea se s t o b e c o vere d i n a n y o f t h e c a te g o rie s i n (a ) a b ove f o r t w o c o nse cu tiv e y ears . W here an en te rp ris e did no t qualif y fo r th e ex em pti o ns sp ecif ie d in (c ) ab ove an d su bse q uen tly , q uali f ie s, t h e e n te rp ris e w il l n o t b e q uali f y f o r e x em ptio ns a s p er ( c ) a b ove, u ntil i t c o ntin u es t o b e s o q uali f ie d f o r t w o c o nse c u ti v e y ears . W here a n e n te rp ris e h as p re v io usly q ualif ie d fo r e x em ptio ns in (b ) o r (c ) a b ove, a s th e ca se m ay b e, b ut n o l o nger q ualif ie s f o r e x em ptio n s in ( b ) o r ( c ) a b ove, a s th e c a se s m ay b e, in th e c u rre n t a cc o unti n g p erio d, th is S ta n dard b eco m es a p plic ab le , in its e n tir e ty o r, i n it s en tir e ty e x cep t e x em ptio ns in (b ) a b ove, a s th e c ase m ay b e, fro m th e c u rre n t p erio d. H ow ev er, th e c o rre sp ondin g p re v io us p erio d fig u re s in re sp ect o f th e re le v an t d is c lo su re s n eed n ot b e p ro vid ed . A n e n te rp ris e , w hic h , p urs u an t t o t h e a b ove p ro vis io ns, a v ail s e x em ptio ns s p ecif ie d i n ( b ) o r (c ) a b ove, a s th e c ase s m ay b e, s h ould d is c lo se th e fa c t. A n e n te rp ris e w hic h a v ails e x em ptio ns s p ec if ie d in ( c ) a b ove s h ould a ls o d is c lo se th e m eth od u se d to c alc u la te a n d pro vid e f o r t h e a c cru ed l ia b ilit y . T he f o ll o w in g i s t h e t e x t o f t h e r e v is e d A cc o unti n g S ta n dard . 7 O bje c tiv e T he o bje cti v e o f th is S ta te m en t is to p re sc rib e th e acco untin g an d d is c lo su re fo r em plo yee b en efits . T he S ta te m en t r e q uir e s a n e n te rp ris e t o r e co gn is e : ( a ) a lia b ili ty w hen an em plo yee h as p ro vid ed se rv ic e in ex ch an ge fo r em plo yee b en efits t o b e p aid i n t h e f u tu re ; a n d ( b ) an ex pen se w hen th e en te rp ris e co nsu m es th e ec o nom ic b en efit aris in g fro m s e rv ic e p ro vid ed b y a n e m plo yee i n e x ch an ge f o r e m plo yee b en efits . S co p e 1. This S ta te m en t s h ould b e a p pli e d b y a n e m plo yer i n a c co untin g f o r a ll e m plo yee b en efit s , e x ce p t e m plo yee s h are -b ase d p ay m en ts3. 2 . This S ta te m en t d oes n ot d eal w ith a c co untin g a n d r e p ortin g b y e m plo yee b en efit p la n s. 3 . The e m plo yee b en efits t o w hic h t h is S ta te m en t a p plie s i n clu de t h ose p ro vid ed : ( a ) under fo rm al pla n s or oth er fo rm al ag re e m en ts betw ee n an en te rp ris e an d i n div id ual e m plo yee s, g ro ups o f e m plo yees o r t h eir r e p re se n ta tiv es; ( b ) under le g is la ti v e re q uir e m en ts , or th ro ugh in dustr y arr a n gem en ts , w here b y e n te rp ris e s a re re q uir e d to c o ntr ib ute to sta te , in dustr y o r o th er m ult i- e m plo yer p la n s; o r ( c ) by th ose in fo rm al p ra ctic e s th at g iv e r is e to a n o blig atio n. I n fo rm al p ra ctic e s g iv e r is e to a n o blig atio n w here th e e n te rp ris e h as n o re alis tic a lt e rn ativ e b ut to p ay e m plo yee b en efits . A n e x am ple o f su ch a n o blig atio n is w here a c h an ge in th e e n te rp ris e ’s in fo rm al pra c tic es would cau se unacce p ta b le dam ag e to its r e la tio nsh ip w ith e m plo yee s. 4 . Em plo yee b en efit s i n clu de: ( a ) sh ort- te rm em plo yee ben efits , su ch as w ag es, sa la rie s an d so cia l se cu rity c o ntr ib uti o ns (e .g ., c o n tr ib u tio n to a n in su ra n ce c o m pan y b y a n e m plo yer to p ay f o r m ed ic al c are o f its e m plo yees), p aid a n nual le a v e, p ro fit- s h arin g a n d b o nuse s ( if p ay ab le w ith in tw elv e m onth s o f th e e n d o f th e p erio d) a n d n on-m oneta ry b en efits (s u ch as m ed ic al c are , h ou sin g, ca rs an d fre e o r su bsid is e d g o ods o r s e rv ic es) f o r c u rre n t e m plo yees; ( b ) post- e m plo ym en t b en efits su ch as g ra tu ity , p en sio n, o th er re tir e m en t b en efit s , p ost- e m plo ym en t l if e i n su ra n ce a n d p ost- e m plo ym en t m ed ic a l c are ; ( c ) oth er lo ng-te rm em plo yee ben efit s , in clu din g lo ng-s e rv ic e le a v e o r sa b b atic a l l e a v e, ju bile e o r o th er lo ng-s e rv ic e b en efit s , lo ng-te rm d is a b ili ty b en efit s a n d, if t h ey a re n ot p ay ab le w holl y w ith in tw elv e m onth s a fte r th e e n d o f th e p erio d, p ro fit - s h arin g, b onuse s a n d d efe rre d c o m pen sa ti o n; a n d 3 T he a cc o u ntin g fo r su ch b en efit s is d ealt w ith in th e G uid an ce N ote o n A cco un ti n g fo r E m plo yee S hare -b ase d P aym en ts i s s u ed b y t h e I n sti tu te o f C harte re d A cc o u nta n ts o f I n dia . 8 (d ) te rm in atio n b en efit s . B eca u se e a ch c ate g o ry id en tif ie d in ( a ) to ( d ) a b ove h as d if fe re n t c h ara cte ris ti c s, th is S ta te m en t e sta b lis h es s e p ara te r e q u ir e m en ts f o r e ac h c ate g o ry . 5 . Em plo yee ben efit s in clu de ben efits pro vid ed to eit h er em plo yees or th eir sp o use s, c h il d re n o r o th er d ep en dan ts an d m ay b e se ttle d b y p ay m en ts (o r th e p ro vis io n o f g o o ds o r s e rv ic es) m ad e e ith er: ( a ) dir e c tl y to th e e m plo yees, to th eir sp ouse s, c h ild re n o r o th er d ep en dan ts , o r to t h eir l e g al h eir s o r n o m in ees; o r ( b ) t o o th ers , s u ch a s t r u sts , i n su ra n ce c o m pan ie s. 6 . An e m plo yee m ay p ro vid e s e rv ic e s to a n e n te rp ris e o n a f u ll- tim e, p art- ti m e, p erm an en t, c asu al o r te m pora ry b asis . F or th e p urp ose o f th is S ta te m en t, e m plo yees in clu de w hole -tim e d ir e c to rs a n d o th er m an ag em en t p ers o nnel. D efin it io n s 7. The f o llo w in g t e rm s a re u se d i n t h is S ta te m en t w it h t h e m ean in gs s p ecif ie d : E m plo ye e b en efits a re a ll fo rm s o f c o n sid era tio n g iv en b y a n e n te rp ris e in e x ch an ge f o r s e rv ic e r e n dere d b y e m plo yee s. S hort- te rm e m plo ye e b en efits a re e m plo yee b en efits (o th er th an te rm in atio n b en efits ) w hic h fa ll d u e w holl y w it h in tw elv e m on th s a fte r th e e n d o f th e p erio d in w hic h th e e m plo yees r e n der t h e r e la te d s e rv ic e . P ost- e m plo ym en t ben efits are em plo yee ben efit s (o th er th an te rm in atio n ben efits ) w hic h a re p aya ble a fte r t h e c o m ple tio n o f e m plo ym en t. P ost- e m plo ym en t b en efit p la n s a re fo rm al o r in fo rm al a rra n gem en ts u nder w hic h a n e n te rp ris e p ro vid es p ost- e m plo ym en t b en efit s f o r o n e o r m ore e m plo yee s. D efin ed co n tr ib u tio n pla n s are post- e m plo ym en t ben efit pla n s un der whic h an e n te rp ris e p ays fix ed c o n tr ib u tio n s in to a se p ara te e n tit y (a fu nd) a n d w ill h ave n o o blig ati o n to p ay f u rth er c o n tr ib u tio n s i f t h e f u nd d o es n ot h old s u ffic ie n t a sse ts to p ay a ll e m plo yee b en efit s r e la tin g t o e m plo ye e s e rv ic e i n t h e c u rre n t a n d p rio r p erio ds. D efin ed ben efit pla n s are post- e m plo ym en t ben efit pla n s oth er th an defin ed c o n tr ib u tio n p la n s. M ulti - e m plo ye r p la n s a re d efin ed c o n tr ib u tio n p la n s ( o th er t h an s ta te p la n s) o r d efin ed b en efit p la n s ( o th er t h an s ta te p la n s) t h at: ( a ) pool th e a ss e ts c o n tr ib u te d b y v a rio u s e n te rp ris e s th at a re n ot u nder c o m mon c o n tr o l; a n d ( b ) use t h ose a sse ts t o p ro vid e b en efit s t o e m plo yees o f m ore t h an o n e e n te rp ris e , o n t h e b asis th at c o n tr ib u tio n a n d b en efit le v els a re d ete rm in ed w ith ou t r e g ard to t h e i d en tity o f t h e e n te rp ris e t h at e m plo ys t h e e m plo ye es c o n cern ed . 9 O th er lo n g-te rm e m plo yee b en efits a re e m plo ye e b en efits ( o th er th an p ost- e m plo ym en t b en efits a n d te rm in atio n b en efits ) w hic h d o n ot fa ll d u e w holl y w ith in tw elv e m on th s a fte r t h e e n d o f t h e p erio d i n w hic h t h e e m plo ye es r e n der t h e r e la te d s e rv ic e. T erm in atio n b en efit s a re e m plo ye e b en efits p aya ble a s a r e su lt o f e ith er: ( a ) an en te rp ris e ’s d ecis io n to te rm in ate a n em plo ye e’s em plo ym en t b efo re th e n orm al r e tir e m en t d ate ; o r ( b ) an e m plo yee ’s d ecis io n to a cc ep t v o lu nta ry r e d u n dan cy in e x ch an ge fo r th ose b en efits ( v o lu nta ry r e ti r e m en t) . V este d em plo yee b en efits a re em plo ye e b en efits th at a re n ot co n dit io n al o n fu tu re e m plo ym en t. T he pre se n t va lu e of a defin ed ben efit ob lig atio n is th e pre se n t va lu e, w ith ou t d ed u ctin g a n y p la n a sse ts , o f e x pecte d f u tu re p aym en ts r e q u ir e d t o s e ttle t h e o b lig atio n r e su lti n g f r o m e m plo yee s e rv ic e i n t h e c u rr e n t a n d p rio r p erio ds. C urre n t se rv ic e co st is th e in cre a se in th e pre se n t va lu e of th e defin ed ben efit o blig ati o n r e su lt in g f r o m e m plo yee s e rv ic e i n t h e c u rre n t p erio d. I n te re st c o st is th e in cre a se d u rin g a p erio d in th e p re se n t v a lu e o f a d efin ed b en efit o blig ati o n w hic h a ris e s b ec a u se t h e b en efit s a re o n e p erio d c lo se r t o s e tt le m en t. P la n a sse ts c o m pris e : ( a ) ass e ts h eld b y a l o n g-te rm e m plo ye e b en efit f u n d; a n d ( b ) qu alif y in g i n su ra n ce p olic ie s. A sse ts held by a lo n g-te rm em plo yee ben efit fu nd are ass e ts (o th er th an non - t r a n sfe ra ble f in an cia l i n str u m en ts i s su ed b y t h e r e p ortin g e n te rp ris e ) t h at: ( a ) are h eld by an en tit y (a fu nd) th at is le g all y se p ara te fr o m th e re p ortin g e n te rp ris e a n d e x is ts s o le ly t o p ay o r f u nd e m plo yee b en efit s ; a n d ( b ) are a va ila b le to b e u se d o n ly t o p ay o r f u nd e m plo yee b en efit s , a re n ot a va ila ble t o th e r e p orti n g e n te rp ris e ’s o w n c re d ito rs ( e ven in b an kru ptc y ), a n d c a n not b e r e tu rn ed t o t h e r e p ortin g e n te rp ris e , u n le ss e ith er: ( i) th e re m ain in g a sse ts o f th e fu n d a re su ffic ie n t to m eet a ll th e re la te d e m plo yee b en efit o bli g ati o n s o f t h e p la n o r t h e r e p orti n g e n te rp ris e ; o r ( ii) th e a sse ts a re re tu rn ed to th e re p ortin g e n te rp ris e to re im bu rse it fo r e m plo yee b en efits a lr e a dy p aid . A q u alif y in g in su ra n ce p olic y is a n in su ra n ce p olic y is s u ed b y a n in su re r th at is n ot a r e la te d party (a s defin ed in A S 18 R ela te d Party D is c lo su re s) of th e re p ortin g e n te rp ris e , i f t h e p ro ce ed s o f t h e p olic y : ( a ) ca n b e u se d o n ly to p a y o r f u n d e m plo ye e b en efits u nder a d efin ed b en efit p la n ; a n d ( b ) are not ava ila ble to th e re p ortin g en te rp ris e ’s ow n cre d ito rs (e ven in b an kru ptc y) a n d c a n not b e p aid t o t h e r e p ortin g e n te rp ris e , u nle ss e ith er: 10 (i) th e p ro cee d s r e p re se n t s u rp lu s a sse ts th at a re n ot n eed ed fo r th e p o lic y t o m eet a ll t h e r e la te d e m plo yee b en efit o blig atio n s; o r ( ii) th e p ro cee d s a re r e tu rn ed to th e r e p orti n g e n te rp ris e to r e im bu rse it f o r e m plo yee b en efits a lr e a dy p aid . F air v a lu e is th e a m ou nt fo r w hic h a n a sse t c o u ld b e e x ch an ged o r a lia bili ty s e ttl e d b etw ee n k n ow le d gea b le , w ill in g p artie s i n a n a rm ’s l e n gth t r a n sa ctio n . T he r e tu rn o n p la n a sse ts i s i n te re st, d iv id en ds a n d o th er r e v en ue d eriv ed f r o m t h e p la n a sse ts , t o g eth er w ith r e a li s e d a n d u n re a lis e d g ain s o r l o sse s o n t h e p la n a sse ts , l e ss a n y c o sts o f a dm in is te rin g t h e p la n a n d l e ss a n y t a x p aya ble b y t h e p la n i ts e lf . A ctu aria l g ain s a n d l o sse s c o m pris e : ( a ) ex perie n ce adju stm en ts (th e effe c ts of dif fe re n ces betw een th e pre vio u s a ctu aria l a ssu m pti o n s a n d w hat h as a ctu ally o cc u rre d ); a n d ( b ) th e e ffe cts o f c h an ges i n a ctu aria l a ss u m ptio n s. P ast s e rv ic e c o st is t h e c h an ge i n th e p re se n t v a lu e o f th e d efin ed b en efit o blig ati o n f o r e m plo yee s e rv ic e in p rio r p erio ds, r e su lti n g i n th e c u rr e n t p erio d f r o m th e in tr o d u ctio n o f, o r c h an ges to , p ost- e m plo ym en t b en efit s o r o th er lo n g-te rm e m plo yee b en efit s . P ast s e rv ic e co st m ay b e eit h er p ositi v e (w here b en efits a re in tr o du ce d o r im pro ve d ) o r n eg ativ e ( w here e x is ti n g b en efits a re r e d u ced ). S h ort-t e r m E m plo yee B en efit s 8. Short- te rm e m plo yee b en efit s i n clu de i te m s s u ch a s: ( a ) wag es, s a la rie s a n d s o cia l s e cu rity c o ntr ib utio ns; ( b ) sh ort- te rm c o m pen sa te d a b se n ce s ( s u ch a s p aid a n nu al le a v e) w here th e a b se n ces a re e x pec te d to o ccu r w it h in tw elv e m onth s a fte r th e e n d o f th e p erio d in w hic h t h e e m plo yees r e n der t h e r e la te d e m plo yee s e rv ic e; ( c ) pro fit - s h arin g an d b onuse s p ay ab le w ith in tw elv e m onth s afte r th e en d o f th e p erio d i n w hic h t h e e m plo yees r e n der t h e r e la te d s e rv ic e; a n d ( d ) non-m oneta ry b en efit s ( s u ch a s m ed ic al c a re , h ousin g, c ars a n d f re e o r s u bsid is e d g o ods o r s e rv ic es) f o r c u rre n t e m plo yee s. 9 . Acc o unti n g fo r sh ort- te rm em plo yee b en efit s is g en era lly str a ig h tf o rw ard b ecau se n o a ctu aria l assu m ptio ns are re q uir e d to m easu re th e oblig ati o n or th e co st an d th ere is no p oss ib ili ty o f a n y a c tu aria l g ain o r lo ss . M ore o ver, s h ort- te rm e m plo yee b en efit o blig atio ns a re m ea su re d o n a n u nd is c o unte d b asis . 11 R eco g n it io n a n d M ea su rem en t A ll S h ort-te r m E m plo yee B en efit s 1 0. When a n e m plo yee h as r e n dere d s e rv ic e to a n e n te rp ris e d u rin g a n a cco u nti n g p erio d, t h e en te rp ris e sh ou ld re co gn is e th e u ndis c o u nte d a m ou nt o f sh ort- te rm e m plo yee b en efits e x pec te d t o b e p aid i n e x ch an ge f o r t h at s e rv ic e: ( a ) as a l ia bilit y ( a ccru ed e x pen se ), a fte r d ed u ctin g a n y a m ou n t a lr e a dy p aid . I f t h e a m ou nt alr e a dy paid ex ce ed s th e u n dis c o u nte d am ou nt of th e ben efits , an e n te rp ris e sh ou ld re c o gn is e th at ex ce ss a s a n a sse t (p re p aid e x pen se ) to th e e x te n t th at th e p re p aym en t w ill le a d to , fo r ex am ple , a re d u ctio n in fu tu re p aym en ts o r a c a sh r e fu nd; a n d ( b ) as a n ex p en se , u n le ss a n oth er A cco u nti n g S ta n dard re q u ir e s o r p erm its th e i n clu sio n of th e ben efits in th e co st of an asse t (s e e, fo r ex am ple , A S 10 A cco u nti n g f o r F ix ed A sse ts ). P ara gra ph s 1 1, 1 4 a n d 1 7 e x pla in h ow a n e n te rp ris e s h ou ld a pply th is r e q u ir e m en t to s h ort- te rm e m plo ye e b en efit s in th e f o rm o f c o m pen sa te d a bse n ce s a n d p ro fit- s h arin g a n d b on u s p la n s. S h ort-te r m C om pen sa te d A bse n ces 1 1. An e n te rp ris e s h ou ld r e c o gn is e t h e e x pecte d c o st o f s h ort- te rm e m plo yee b en efit s i n t h e f o rm o f c o m pen sa te d a bse n ces u nder p ara gra p h 1 0 a s f o ll o w s: ( a ) in th e c a se o f a ccu m ula tin g c o m pen sa te d a bse n ces, w hen t h e e m plo yee s r e n der s e rv ic e t h at i n cre a se s t h eir e n ti tle m en t t o f u tu re c o m pen sa te d a bse n ces; a n d ( b ) in th e ca se o f n on -a cc u m ula ti n g co m pen sa te d a bse n ce s, w hen th e a b se n ces o ccu r. 1 2. An en te rp ris e m ay co m pen sa te em plo yees fo r ab se n ce fo r v ario u s re aso ns in clu din g v aca ti o n, sic k ness an d sh ort- te rm dis a b ilit y , an d m ate rn ity or pate rn ity . Entit le m en t to c o m pen sa te d a b se n ce s f a lls i n to t w o c ate g o rie s: ( a ) acc u m ula ti n g; a n d ( b ) non-a c cu m ula tin g. 1 3. Acc u m ula ti n g c o m pen sa te d a b se n ces a re th ose th at a re c a rrie d f o rw ard a n d c a n b e u se d i n fu tu re perio ds if th e cu rr e n t perio d’s en ti tl e m en t is not use d in fu ll. A cc u m ula ti n g c o m pen sa te d a b se n ces m ay b e e ith er v esti n g (in o th er w ord s, e m plo yees a re e n ti tle d to a c ash p ay m en t fo r u nuse d e n tit le m en t o n le av in g th e e n te rp ris e ) o r n on-v estin g (w hen e m plo yees a re n ot en tit le d to a ca sh p ay m en t fo r u nuse d en titl e m en t o n le av in g). A n o blig ati o n aris e s as e m plo yee s re n der s e rv ic e th at in cre ase s th eir e n ti tle m en t to fu tu re c o m pen sa te d a b se n ces. T he o blig ati o n e x is ts , a n d is r e c o gn is e d , e v en if th e c o m pen sa te d a b se n ce s a re n on-v estin g, a lt h ough t h e p ossib il ity t h at e m plo yees m ay l e a v e b efo re t h ey u se a n a cc u m ula te d n o n-v esti n g e n ti tle m en t a ffe c ts t h e m easu re m en t o f t h at o b lig atio n. 1 4. An en te rp ris e sh ou ld m ea su re th e ex pecte d co st of accu m ula tin g co m pen sa te d a bse n ces a s th e a dditi o n al a m ou n t th at th e e n te rp ris e e x pects to p ay a s a r e su lt o f th e u nuse d e n tit le m en t t h at h as a ccu m ula te d a t t h e b ala n ce s h ee t d ate . 12 1 5. The m eth od s p ec if ie d i n t h e p re v io us p ara g ra p h m easu re s th e o bli g atio n a t th e a m ount o f t h e ad ditio nal pay m en ts th at are ex pecte d to aris e so le ly fro m th e fa ct th at th e ben efit a cc u m ula te s. In m an y ca se s, an en te rp ris e m ay n ot n ee d to m ak e d eta ile d co m puta ti o ns to e stim ate th at th ere is n o m ate ria l o blig atio n fo r u nuse d c o m pen sa te d a b se n ce s. F or e x am ple , a l e a v e o blig atio n is li k ely to b e m ate ria l o nly if th ere is a f o rm al o r in fo rm al u nders ta n din g th at u nuse d l e a v e m ay b e t a k en a s p aid v acatio n. E xam ple I ll u str a tin g P ara gra p hs 1 4 a n d 1 5 A n e n te rp ris e h as 1 00 e m plo yee s, w ho a re e ach e n titl e d to f iv e w ork in g d ay s o f le av e f o r e ac h y ear. U nuse d le av e m ay b e c arrie d f o rw ard f o r o ne c a le n dar y ear. T he le av e is ta k en f ir s t o ut o f th e c u rre n t y ear’s e n tit le m en t a n d th en o ut o f a n y b ala n ce b ro ugh t f o rw ard f ro m th e p re v io us y ear ( a L IF O b asis ). A t 3 1 D ece m ber 2 0X 4, th e a v era g e u nuse d e n ti tle m en t is tw o d ay s p er e m plo yee. T he e n te rp ris e ex pects , base d on past ex perie n ce w hic h is ex pecte d to co ntin ue, th at 92 em plo yees w il l t a k e n o m ore th an fiv e d ay s o f le av e in 2 0X 5 an d th at th e re m ain in g e ig h t e m plo yees w ill t a k e a n a v era g e o f s ix a n d a h alf d ay s e ac h . T he e n te rp ris e e xp ects t h at it w il l p ay a n a dditio n al 1 2 d ays o f p ay a s a r e su lt o f th e u nuse d e n tit le m en t th at h as a cc u m ula te d a t 3 1 D ecem ber 2 0X 4 (o ne a nd a half d ays ea ch , fo r eig h t em plo ye es). T here fo re , th e en te rp ris e re co gnis e s a lia bil it y , a s a t 3 1 D ec em ber 2 0X 4, e q ual t o 1 2 d ays o f p ay. 1 6. Non-a c cu m ula tin g c o m pen sa te d a b se n ce s d o n ot c arry f o rw ard : th ey la p se if th e c u rre n t p erio d’s e n titl e m en t i s n ot u se d i n f u ll a n d d o n ot e n titl e e m plo yees t o a c ash p ay m en t f o r u nuse d e n ti tle m en t o n l e av in g t h e e n te rp ris e . T his i s c o m m only t h e c ase f o r m ate rn it y o r p ate rn ity l e av e. A n e n te rp ris e r e c o gn is e s n o l ia b ilit y o r e x pen se u n til th e t im e o f th e a b se n ce, b ecau se e m plo yee s e rv ic e d oes n ot i n cre ase t h e a m ount o f t h e b en efit . P ro fit -s h arin g a n d B on us P la n s 1 7. An e n te rp ris e s h ou ld r e co gn is e t h e e x pec te d c o st o f p ro fit- s h arin g a n d b on us p aym en ts u n der p ara gra ph 1 0 w hen , a n d o n ly w hen : ( a ) th e e n te rp ris e h as a p re se n t o bli g ati o n to m ake su ch p a ym en ts a s a re su lt o f p ast e ven ts ; a n d ( b ) a r e lia ble e stim ate o f t h e o bli g ati o n c a n b e m ade. A pre se n t oblig atio n ex is ts w hen , an d on ly w hen , th e en te rp ris e h as n o re a lis ti c a lt e rn ati v e b u t t o m ake t h e p aym en ts . 1 8. Under so m e p ro fit- s h arin g p la n s, e m plo yee s re ceiv e a sh are o f th e p ro fit o nly if th ey r e m ain w it h th e e n te rp ris e f o r a s p ecif ie d p erio d. S uch p la n s c re ate a n o b lig ati o n a s e m plo yees r e n der s e rv ic e th at in cre a se s th e a m ount to b e p aid if th ey r e m ain in s e rv ic e u ntil th e e n d o f th e s p ecif ie d perio d. T he m ea su re m en t of su ch oblig atio n s re fle cts th e po ss ib ili ty th at so m e e m plo yee s m ay l e a v e w ith ou t r e ce iv in g p ro fit- s h arin g p ay m en ts . 13 E xam ple I ll u str a tin g P ara gra p h 1 8 A p ro fit - s h arin g p la n re q uir e s a n e n te rp ris e to p ay a s p ec if ie d p ro portio n o f its n et pro fit fo r th e year to em plo yees w ho se rv e th ro ugh out th e year. If no em plo yees le av e d urin g th e y ear, th e to ta l p ro fit -s h arin g p ay m en ts fo r th e y ea r w il l b e 3 % o f n et p ro fit . T he e n te rp ris e e stim ate s th at s ta ff tu rn over w ill r e d u ce th e p ay m en ts t o 2 .5 % o f n et p ro fit. T he e n te rp ris e r e co gnis e s a l i a bili ty a nd a n e xp en se o f 2 .5 % o f n et p ro fit. 1 9. An e n te rp ris e m ay h av e n o le g al o blig atio n to p ay a b onus. N ev erth ele ss, in s o m e c a se s, a n e n te rp ris e h as a p ra c tic e o f p ay in g b onuse s. I n s u ch c a se s a ls o , t h e e n te rp ris e h as a n o bli g ati o n b eca u se th e e n te rp ris e h as n o r e ali s tic a lte rn ati v e b u t to p ay th e b onus. T he m easu re m en t o f th e o blig ati o n r e fle cts t h e p ossib il it y t h at s o m e e m plo yees m ay l e av e w it h out r e c eiv in g a b onu s. 2 0. An e n te rp ris e c a n m ak e a re lia b le e sti m ate o f its o b lig ati o n u nder a p ro fit- s h arin g o r b onus p la n w hen , a n d o nly w hen : ( a ) th e f o rm al te rm s o f th e p la n c o nta in a f o rm ula f o r d ete rm in in g th e a m ount o f th e b en efit; o r ( b ) th e e n te rp ris e d ete rm in es th e a m ounts to b e p aid b efo re th e fin an cia l s ta te m en ts a re a p pro ved ; o r ( c ) past p ra c tic e g iv es c le ar e v id en ce o f t h e a m ount o f t h e e n te rp ris e ’s o bli g atio n. 2 1. An o blig ati o n u nd er p ro fit - s h arin g a n d b onus p la n s r e su lts f ro m e m plo yee s e rv ic e a n d n ot f ro m a tr a n sa cti o n w ith th e e n te rp ris e ’s o w ners . T here fo re , a n e n te rp ris e re c o gn is e s th e c o st o f p ro fit - s h arin g a n d b onus p la n s n ot a s a d is tr ib utio n o f n et p ro fit b ut a s a n e x pen se . 2 2. If p ro fit- s h arin g a n d b onus p ay m en ts a re n ot d ue w holly w it h in tw elv e m on th s a fte r th e e n d o f th e p erio d in w hic h th e e m plo yee s re n der th e re la te d s e rv ic e , th ose p ay m en ts a re o th er l o ng-te rm e m plo yee b en efit s ( s e e p ara g ra p h s 1 26127-13 1132). D is c lo su re 23. Alt h ough th is S ta te m en t d oes n ot r e q uir e s p ec if ic d is c lo su re s a b out s h ort- te rm e m plo yee b en efits , o th er A cco untin g S ta n dard s m ay re q u ir e d is c lo su re s. F or e x am ple , w here re q uir e d b y A S 1 8 R ela te d P arty D is c lo su re s a n e n te rp ris e d is c lo se s i n fo rm ati o n a b out e m plo yee b en efit s f o r k ey m an ag em en t p ers o nnel. P ost- e m plo ym en t B en efit s : D efin ed C on tr ib utio n P la n s a n d D efin ed B en efit P la n s 24. Post- e m plo ym en t b en efits i n clu de: ( a ) re ti r e m en t b en efit s , e .g ., g ra tu ity a n d p en sio n; a n d ( b ) oth er b en efit s , e .g ., p ost- e m plo ym en t l i f e i n su ra n ce a n d p ost- e m plo ym en t m ed ic a l c are . 14 A rra n gem en ts w here b y an en te rp ris e pro vid es post- e m plo ym en t ben efit s are post- e m plo ym en t b en efit p la n s. A n e n te rp ris e a p plie s th is S ta te m en t to a ll s u ch a rra n gem en ts w heth er o r n ot t h ey i n vo lv e t h e e sta b li s h m en t o f a s e p ara te e n tit y t o r e ceiv e c o ntr ib utio ns a n d t o p ay b en efits . 2 5. Post- e m plo ym en t ben efit pla n s are cla ssif ie d as eith er defin ed co ntr ib uti o n p la n s o r d efin ed b en efit p la n s, d ep en din g o n th e e co nom ic su bsta n ce o f th e p la n a s d eriv ed fr o m its p rin cip al t e rm s a n d c o nditi o ns. U nd er d efin ed c o ntr ib uti o n p la n s: ( a ) th e e n te rp ris e ’s o blig atio n is lim it e d to th e a m ount th at it a g re e s to c o ntr ib ute to t h e fu nd. T hus, th e am ou nt o f th e p ost- e m plo ym en t b en efits re ce iv ed b y th e e m plo yee i s d ete rm in ed b y t h e a m ount o f c o ntr ib uti o ns p aid b y a n e n te rp ris e ( a n d a ls o b y th e em plo yee) to a p ost- e m plo ym en t b en efit p la n o r to an in su ra n ce c o m pan y, t o geth er w ith i n vestm en t r e tu rn s a ris in g f ro m t h e c o ntr ib utio ns; a n d ( b ) in co nse q uen ce, actu aria l ris k (th at ben efits w il l be le ss th an ex pec te d ) an d i n vestm en t r is k ( th at a ss e ts i n veste d w il l b e i n su ffic ie n t t o m ee t e x pecte d b en efits ) f a ll o n t h e e m plo yee . 2 6. Exam ple s o f c a se s w here a n e n te rp ris e ’s o bli g atio n is n ot lim ite d to th e a m ount th at it a g re e s t o c o ntr ib ute t o t h e f u nd a re w hen t h e e n te rp ris e h as a n o bli g atio n t h ro ugh: ( a ) a p la n b en efit f o rm ula t h at i s n ot l in ked s o le ly t o t h e a m ount o f c o n tr ib u tio n s; o r ( b ) a g u ara n te e, e it h er in dir e ctl y th ro ugh a p la n o r d ir e ctly , o f a s p ec if ie d re tu rn o n c o ntr ib uti o ns; o r ( c ) in fo rm al p ra ctic es th at g iv e r is e to a n o blig ati o n, f o r e x am ple , a n o blig ati o n m ay a ris e w here an en te rp ris e has a his to ry of in cre asin g ben efit s fo r fo rm er e m plo yee s to k eep p ace w ith in fla tio n e v en w here th ere is n o le g al o blig atio n to d o s o . 2 7. Under d efin ed b en efit p la n s: ( a ) th e e n te rp ris e ’s o blig ati o n is to p ro vid e th e a g re e d b en efit s to c u rre n t a n d f o rm er e m plo yee s; a n d ( b ) actu aria l r is k ( th at b en efit s w ill c o st m ore t h an e x pecte d ) a n d i n vestm en t r is k f a ll, i n su bsta n ce, o n th e e n te rp ris e . If a ctu aria l o r in vestm en t e x p erie n ce a re w ors e t h an e x p ecte d , t h e e n te rp ris e ’s o bli g atio n m ay b e i n cre a se d . 2 8. Para g ra p hs 2 9 t o 4 3 b elo w d ea l w ith d efin ed c o ntr ib uti o n p la n s a n d d efin ed b en efit p la n s i n t h e c o nte x t o f m ulti- e m plo yer p la n s, s ta te p la n s a n d i n su re d b en efit s . M ult i- e m plo y er P la n s 2 9. An e n te rp ris e s h ou ld c la ssif y a m ulti- e m plo ye r p la n a s a d efin ed c o n tr ib u tio n p la n o r a d efin ed b en efit p la n u nder th e te rm s o f th e p la n (in clu din g a n y o bli g ati o n th at g oes b eyo n d t h e fo rm al te rm s). W here a m ult i- e m plo yer p la n is a d efin ed b en efit p la n , a n en te rp ris e s h ou ld : ( a ) acco u nt f o r it s p ro portio n ate s h are o f t h e d efin ed b en efit o bli g atio n , p la n a sse ts a n d c o st a sso cia te d w it h th e p la n in th e sa m e w ay a s fo r a n y o th er d efin ed b en efit p la n ; a n d 15 (b ) dis c lo se t h e i n fo rm atio n r e q u ir e d b y p ara gra ph 1191 20. 3 0. When su ffic ie n t in fo rm ati o n is n ot a va il a ble to u se d efin ed b en efit a cco u nti n g fo r a m ulti - e m plo ye r p la n t h at i s a d efin ed b en efit p la n , a n e n te rp ris e s h ou ld : ( a ) acco u nt fo r th e pla n under para gra ph s 45-4 7 as if it were a defin ed c o n tr ib u ti o n p la n ; ( b ) dis c lo se : ( i) th e f a ct t h at t h e p la n i s a d efin ed b en efit p la n ; a n d ( ii) th e re a so n w hy su ffic ie n t in fo rm ati o n is n ot a va il a ble to en ab le th e e n te rp ris e t o a cco u nt f o r t h e p la n a s a d efin ed b en efit p la n ; a n d ( c ) to th e e x te n t th at a su rp lu s o r d efic it in th e p la n m ay a ffe ct th e a m ou nt o f f u tu re c o n tr ib u ti o n s, d is c lo se i n a ddit io n : ( i) an y a va ila ble i n fo rm ati o n a bou t t h at s u rp lu s o r d efic it; ( ii) th e b asis u se d t o d ete rm in e t h at s u rp lu s o r d efic it ; a n d ( iii ) th e i m pli c a ti o n s, i f a n y, f o r t h e e n te rp ris e . 3 1. One e x am ple o f a d efin ed b en efit m ulti - e m plo yer p la n i s o ne w here : ( a ) th e p la n is fin an ced in a m an ner s u ch th at c o ntr ib u tio ns a re s e t a t a le v el th at is e x pec te d to b e s u ffic ie n t to p ay th e b en efit s f a ll in g d ue in th e s a m e p erio d; a n d f u tu re ben efits earn ed du rin g th e cu rre n t perio d w ill be paid out of fu tu re c o ntr ib uti o ns; a n d ( b ) em plo yee s’ ben efit s are dete rm in ed by th e le n gth of th eir se rv ic e an d th e p arti c ip ati n g e n te rp ris e s h av e n o re a li s tic m ean s o f w it h dra w in g fro m th e p la n w ith out p ay in g a c o ntr ib uti o n f o r th e b en efit s e arn ed b y e m plo yees u p to th e d ate o f w ith dra w al. S uch a p la n c re ate s a ctu aria l r is k f o r th e e n te rp ris e ; i f th e u ltim ate c o st o f b en efits a lr e a d y e arn ed a t t h e b ala n ce s h eet d ate i s m ore t h an e x pecte d , t h e e n te rp ris e w ill h av e to e ith er in cre a se it s c o ntr ib uti o ns o r p ers u ad e e m plo yee s to a cc ep t a r e d u cti o n i n b en efits . T here fo re , s u ch a p la n i s a d efin ed b en efit p la n . 3 2. Where s u ffic ie n t i n fo rm atio n is a v aila b le a b out a m ulti- e m plo yer p la n w hic h i s a d efin ed b en efit p la n , a n e n te rp ris e a c co unts f o r it s p ro porti o nate s h are o f th e d efin ed b en efit o blig atio n, p la n a sse ts a n d p ost- e m plo ym en t b en efit c o st a sso cia te d w it h t h e p la n i n t h e s a m e w ay a s f o r a n y o th er d efin ed b en efit p la n . H ow ev er, in s o m e c ase s, a n e n te rp ris e m ay n ot b e a b le to i d en tif y its s h are o f th e u nderly in g f in an cia l p ositio n a n d p erf o rm an ce o f th e p la n w ith s u ffic ie n t r e lia b ili ty f o r a cco u ntin g p urp o se s. T his m ay o ccu r i f : ( a ) th e e n te rp ris e d oes n ot h av e a c ce ss t o i n fo rm ati o n a b out th e p la n t h at s a ti s fie s t h e r e q uir e m en ts o f t h is S ta te m en t; o r ( b ) th e p la n e x pose s t h e p arti c ip atin g e n te rp ris e s t o a c tu aria l r is k s a sso cia te d w it h t h e c u rre n t a n d f o rm er e m plo yee s o f o th er e n te rp ris e s, w ith th e r e su lt th at th ere is n o c o nsis te n t a n d re lia b le b asis f o r a llo ca ti n g th e o bli g atio n, p la n a sse ts a n d c o st to i n div id ual e n te rp ris e s p arti c ip ati n g i n t h e p la n . I n t h ose c a se s, a n e n te rp ris e a c co unts f o r t h e p la n a s i f i t w ere a d efin ed c o ntr ib utio n p la n a n d d is c lo se s t h e a d ditio nal i n fo rm atio n r e q uir e d b y p ara g ra p h 3 0. 16 3 3. Mult i- e m plo yer pla n s are dis tin ct fro m gro up ad m in is tr a ti o n pla n s. A gro up a d m in is tr a ti o n pla n is m ere ly an ag gre g atio n of sin gle em plo yer pla n s co m bin ed to allo w p arti c ip ati n g em plo yers to pool th eir asse ts fo r in vestm en t p urp ose s an d re d uce in vestm en t m an ag em en t a n d a d m in is tr a tio n c o sts , b ut th e c la im s o f d if fe re n t e m plo yers a re s e g re g ate d f o r t h e so le ben efit of th eir ow n em plo yee s. G ro up ad m in is tr a tio n pla n s pose no parti c u la r a cc o unti n g p ro ble m s b ecau se in fo rm ati o n is re a d il y a v aila b le to tr e at th em in th e s a m e w ay a s a n y oth er sin gle em plo yer pla n an d bec au se su ch pla n s do not ex pose th e partic ip ati n g e n te rp ris e s to actu aria l ris k s ass o cia te d w ith th e cu rre n t an d fo rm er em plo yees of oth er e n te rp ris e s. The defin it io ns in th is Sta te m en t re q u ir e an en te rp ris e to cla ssif y a gro up a d m in is tr a ti o n p la n a s a d efin ed c o ntr ib utio n p la n o r a d efin ed b en efit p la n in a cc o rd an ce w ith t h e t e rm s o f t h e p la n ( in clu din g a n y o blig ati o n t h at g o es b ey o nd t h e f o rm al t e rm s). 3 4. Defin ed b en efit p la n s t h at s h are r is k s b etw ee n v ario us e n te rp ris e s u nder c o m mon c o ntr o l, f o r e x am ple , a p are n t a n d i ts s u bsid ia rie s, a re n ot m ulti - e m plo yer p la n s. 3 5. In r e sp ec t o f s u ch a p la n , if th ere i s a c o ntr a ctu al a g re em en t o r s ta te d p olic y f o r c h arg in g t h e n et d efin ed b en efit c o st f o r th e p la n a s a w hole to i n div id ual g ro u p e n te rp ris e s, t h e e n te rp ris e r e co gnis e s, i n i t s s e p ara te f in an cia l s ta te m en ts , t h e n et d efin ed b en efit c o st s o c h arg ed . I f t h ere i s n o s u ch a g re e m en t o r p olic y , th e n et d efin ed b en efit c o st is r e co gn is e d in th e s e p ara te f in an cia l s ta te m en ts o f th e g ro up e n te rp ris e th at i s l e g ally th e s p onso rin g e m plo yer f o r th e p la n . T he o th er g ro up en te rp ris e s re co gn is e , in th eir se p ara te fin an cia l sta te m en ts , a co st eq ual to th eir c o ntr ib uti o n p ay ab le f o r t h e p erio d. 3 6. AS 2 9 P ro vis io n s, C ontin gen t L ia bili tie s a nd C on tin gen t A sse ts r e q uir e s a n e n te rp ris e to r e co gnis e , o r d is c lo se in fo rm ati o n a b out, c e rta in c o nti n gen t li a b il it ie s. I n th e c o nte x t o f a m ult i- e m plo yer p la n , a c o ntin gen t l i a b il ity m ay a ris e f ro m , f o r e x am ple : ( a ) actu aria l lo sse s re la tin g to o th er p artic ip atin g e n te rp ris e s b ecau se e ac h e n te rp ris e t h at p arti c ip ate s in a m ulti - e m plo yer p la n sh are s in th e a c tu aria l ris k s o f e v ery o th er p artic ip atin g e n te rp ris e ; o r ( b ) an y r e sp onsib il ity u nder th e te rm s o f a p la n to f in an ce a n y s h ortf a ll in th e p la n if o th er e n te rp ris e s c ease t o p artic ip ate . S ta te P la n s 3 7. An e n te rp ris e s h ou ld a cco u n t f o r a s ta te p la n in th e s a m e w ay a s f o r a m ulti- e m plo yer p la n ( s e e p ara g ra ph s 2 9 a n d 3 0). 3 8. Sta te p la n s a re e sta b lis h ed b y le g is la tio n to c o ver a ll e n te rp ris e s (o r a ll e n te rp ris e s in a p arti c u la r cate g o ry , fo r ex am ple , a sp ecif ic in dustr y ) an d are o p era te d b y n atio nal o r lo ca l g o vern m en t o r b y a n oth er b o dy ( f o r e x am ple , a n a u to nom ous a g en cy c re ate d s p ecif ic ally f o r t h is p urp ose ) w hic h is n ot su bje ct to c o ntr o l o r in flu en ce b y th e re p orti n g e n te rp ris e . S om e p la n s e sta b lis h ed b y a n e n te rp ris e p ro vid e b oth c o m puls o ry b en efits w hic h s u bsti tu te f o r b en efits th at w ould o th erw is e b e c o vere d u nder a s ta te p la n a n d a d dit io nal v o lu nta ry b en efits . S uch p la n s a re n ot s ta te p la n s. 3 9. Sta te p la n s a re c h ara c te ris e d a s d efin ed b en efit o r d efin ed c o ntr ib utio n i n n atu re b ase d o n t h e e n te rp ris e ’s o bli g ati o n u nder th e p la n . M an y s ta te p la n s a re fu n ded in a m an ner s u ch th at c o ntr ib uti o ns a re s e t a t a l e v el t h at i s e x pecte d t o b e s u ffic ie n t t o p ay t h e r e q uir e d b en efits f a lli n g d ue i n t h e s a m e p erio d; f u tu re b en efits e arn ed d urin g t h e c u rr e n t p erio d w ill b e p aid o ut o f f u tu re 17 co ntr ib uti o ns. N ev erth ele ss, in m ost sta te p la n s, th e e n te rp ris e h as n o o bli g atio n to p ay th ose f u tu re b en efit s : i ts o nly o b lig ati o n i s t o p ay t h e c o ntr ib utio ns a s t h ey f a ll d ue a n d i f t h e e n te rp ris e c ea se s to e m plo y m em bers o f th e s ta te p la n , i t w ill h av e n o o bli g atio n to p ay th e b en efit s e arn ed b y su ch em plo yees in pre v io us yea rs . For th is re aso n, sta te pla n s are norm ally defin ed c o ntr ib uti o n p la n s. H ow ev er, in th e ra re c ase s w hen a s ta te p la n is a d efin ed b en efit p la n , a n e n te rp ris e a p p lie s t h e t r e atm en t p re sc rib ed i n p ara g ra p hs 2 9 a n d 3 0. I n su red B en efit s 4 0. An e n te rp ris e m ay p ay in su ra n ce p re m iu m s to fu n d a p ost- e m plo ym en t b en efit p la n . T he e n te rp ris e s h ou ld tr e a t s u ch a p la n a s a d efin ed c o n tr ib u ti o n p la n u nle ss th e e n te rp ris e w ill h ave ( e it h er d ir e ctl y , o r i n dir e c tly t h ro u gh t h e p la n ) a n o bli g ati o n t o e ith er: ( a ) pay t h e e m plo ye e b en efits d ir e ctly w hen t h ey f a ll d u e; o r ( b ) pay fu rth er a m ou n ts if th e in su re r d oes n ot p a y a ll fu tu re e m plo ye e b en efits r e la ti n g t o e m plo yee s e rv ic e i n t h e c u rre n t a n d p rio r p erio ds. I f th e e n te rp ris e r e ta in s s u ch a n o bli g atio n , th e e n te rp ris e s h ou ld tr e a t th e p la n a s a d efin ed b en efit p la n . 4 1. The ben efit s in su re d by an in su ra n ce co ntr a ct need no t hav e a dir e c t or au to m ati c r e la tio nsh ip w it h th e en te rp ris e ’s o blig atio n fo r em plo yee b en efit s . P ost- e m plo ym en t b en efit p la n s in vo lv in g in su ra n ce c o ntr a cts a re s u bje ct to th e s a m e d is tin ctio n b etw een a c co untin g a n d f u ndin g a s o th er f u nded p la n s. 4 2. Where a n e n te rp ris e fu nds a p ost- e m plo ym en t b en efit o blig atio n b y c o ntr ib utin g to a n i n su ra n ce p olic y u nder w hic h th e e n te rp ris e ( e ith er d ir e ctly , in dir e c tl y th ro ugh th e p la n , th ro ugh t h e m ec h an is m fo r se tti n g fu tu re p re m iu m s o r th ro ugh a re la te d p arty re la ti o nsh ip w it h th e i n su re r) re ta in s an obli g ati o n, th e pay m en t of th e p re m iu m s does n ot am ount to a d efin ed c o ntr ib uti o n a rra n gem en t. I t f o llo w s t h at t h e e n te rp ris e : ( a ) acc o unts f o r a q ualif y in g i n su ra n ce p oli c y a s a p la n a sse t ( s e e p ara g ra p h 7 ); a n d ( b ) re co gnis e s o th er in su ra n ce p oli c ie s a s r e im burs e m en t r ig h ts ( if t h e p olic ie s s a tis fy t h e c rite ria i n p ara g ra p h 1 03). 4 3. Where a n in su ra n ce p olic y is in th e n am e o f a s p ecif ie d p la n p arti c ip an t o r a g ro up o f p la n p artic ip an ts a n d th e e n te rp ris e d oes n ot h av e a n y o blig atio n to c o ver a n y lo ss o n th e p olic y , t h e en te rp ris e has n o o blig atio n to p ay b en efit s to th e em plo yees an d th e in su re r h as so le r e sp onsib il it y f o r p ay in g t h e b en efit s . T he p ay m en t o f f ix ed p re m iu m s u nder s u ch c o n tr a c ts i s , i n s u bsta n ce , th e s e ttle m en t o f th e e m plo yee b en efit o blig atio n, r a th er th an a n in vestm en t to m ee t t h e o blig atio n. C onse q uen tl y , th e e n te rp ris e n o lo nger h as a n a sse t o r a li a b il it y . T here fo re , a n e n te rp ris e t r e ats s u ch p ay m en ts a s c o ntr ib uti o ns t o a d efin ed c o ntr ib utio n p la n . P ost- e m plo ym en t B en efit s : D efin ed C on tr ib utio n P la n s 44. Acc o unti n g fo r defin ed co ntr ib utio n pla n s is str a ig h tf o rw ard bec au se th e re p orti n g e n te rp ris e ’s o blig atio n fo r e ac h p erio d is d ete rm in ed b y th e a m ounts to b e c o ntr ib ute d fo r th at p erio d. C onse q uen tly , n o a ctu aria l a ssu m ptio ns a re re q uir e d to m easu re th e o blig ati o n o r th e 18 ex pen se a n d th ere is n o p oss ib ili ty o f a n y a ctu aria l g ain o r lo ss. M ore o ver, th e o blig atio n s a re m ea su re d o n a n u ndis c o unte d b asis , e x ce p t w here th ey d o n ot fa ll d ue w holly w ith in tw elv e m onth s a fte r t h e e n d o f t h e p erio d i n w hic h t h e e m plo yee s r e n der t h e r e la te d s e rv ic e . R eco g n it io n a n d M ea su rem en t 4 5. When a n e m plo ye e h as r e n dere d s e rv ic e t o a n e n te rp ris e d u rin g a p erio d, t h e e n te rp ris e s h ou ld r e co gn is e th e c o n tr ib u tio n p aya ble to a d efin ed c o n tr ib u ti o n p la n in e x ch an ge f o r th at s e rv ic e : ( a ) as a lia bili ty (a ccru ed e x pen se ), a fte r d ed u ctin g a n y c o n tr ib u ti o n a lr e a dy p aid . I f th e c o n tr ib u ti o n a lr e a d y p aid e x cee d s th e c o n tr ib u ti o n d u e f o r s e rv ic e b efo re t h e b ala n ce s h eet d ate , a n e n te rp ris e s h ou ld r e c o gn is e th at e x ce ss a s a n a sse t ( p re p aid e x pen se ) to th e e x te n t th at th e p re p aym en t w ill le a d to , f o r e x am ple , a r e d u cti o n i n f u tu re p a ym en ts o r a c a sh r e fu nd; a n d ( b ) as a n ex p en se , u n le ss a n oth er A cco u nti n g S ta n dard re q u ir e s o r p erm its th e i n clu sio n o f th e c o n tr ib u tio n in th e c o st o f a n a ss e t (s e e, fo r e x am ple , A S 1 0, A cco u nti n g f o r F ix ed A sse ts ). 4 6. Where c o n tr ib u tio n s t o a d efin ed c o n tr ib u tio n p la n d o n ot f a ll d u e w holl y w it h in t w elv e m on th s a fte r th e e n d o f th e p erio d in w hic h th e e m plo ye es r e n der th e r e la te d se rv ic e , th ey s h ou ld b e d is c o u n te d u sin g t h e d is c o u n t r a te s p ec if ie d i n p ara gra ph 7 8. D is c lo su re 47. An en te rp ris e sh ou ld dis c lo se th e am ou nt re co gn is e d as an ex pen se fo r defin ed c o n tr ib u ti o n p la n s. 4 8. Where r e q uir e d b y A S 1 8 R ela te d P arty D is c lo su re s a n e n te rp ris e d is c lo se s in fo rm ati o n a b out c o ntr ib u tio ns t o d efin ed c o ntr ib utio n p la n s f o r k ey m an ag em en t p ers o nnel. P ost- e m plo ym en t B en efit s : D efin ed B en efit P la n s 49. Acc o unti n g fo r defin ed ben efit pla n s is co m ple x becau se actu aria l ass u m ptio n s are r e q uir e d to m ea su re th e o bli g ati o n a n d th e e x pen se a n d th ere is a p ossib il ity o f a ctu aria l g ain s a n d lo ss e s. M ore o ver, th e o blig atio ns a re m ea su re d o n a d is c o unte d b asis b ec au se th ey m ay b e s e ttl e d m an y y ears a fte r th e e m plo yees r e n der th e r e la te d s e rv ic e . W hil e th e S ta te m en t r e q uir e s t h at it is th e re sp onsib il ity o f th e re p orti n g en te rp ris e to m easu re th e o bli g atio ns u nd er th e d efin ed b en efit p la n s, it is re c o gn is e d th at fo r d o in g s o th e e n te rp ris e w ould n orm ally u se th e s e rv ic es o f a q ualif ie d a ctu ary . R eco g n it io n a n d M ea su rem en t 5 0. Defin ed b en efit p la n s m ay b e u nfu nded , o r th ey m ay b e w holl y o r p artly fu nd ed b y c o ntr ib uti o ns b y an en te rp ris e , a n d so m eti m es its em plo yees, in to an en tity , o r fu nd, th at is l e g all y s e p ara te fro m th e re p orti n g e n te rp ris e a n d fro m w hic h th e e m plo yee b en efits a re p aid . T he p ay m en t o f fu nd ed b en efit s w hen th ey fa ll d ue d ep en ds n ot o nly o n th e fin an cia l p o siti o n a n d t h e in vestm en t p erf o rm an ce o f th e f u nd b u t a ls o o n a n e n te rp ris e ’s a b il it y to m ak e g o o d a n y 19 sh ortf a ll i n t h e f u nd’s a ss e ts . T here fo re , t h e e n te rp ris e i s , i n s u bsta n ce, u nderw rit in g t h e a ctu aria l a n d in vestm en t ris k s asso cia te d w ith th e pla n . C onse q uen tly , th e ex pen se re co gnis e d fo r a d efin ed b en efit p la n i s n ot n ec essa ril y t h e a m ount o f t h e c o ntr ib utio n d ue f o r t h e p erio d. 5 1. Acc o unti n g b y a n e n te rp ris e f o r d efin ed b en efit p la n s i n vo lv es t h e f o ll o w in g s te p s: ( a ) usin g a ctu aria l te ch n iq ues to m ak e a re li a b le e stim ate o f th e a m ount o f b en efit t h at e m plo yee s h av e e arn ed in re tu rn fo r th eir se rv ic e in th e c u rre n t a n d p rio r p erio ds. T his r e q uir e s a n e n te rp ris e to d ete rm in e h ow m uch b en efit i s a tt r ib uta b le t o th e c u rr e n t a n d p rio r p erio ds (s e e p ara g ra p hs 6 8-7 2) a n d to m ak e e sti m ate s ( a ctu aria l a ssu m pti o ns) a b out d em ogra p hic v aria b le s (s u ch a s e m plo yee tu rn over a n d m orta li ty ) a n d fin an cia l v aria b le s (s u ch a s fu tu re in cre ase s in sa la rie s a n d m ed ic a l c o sts ) t h at w il l i n flu en ce t h e c o st o f t h e b en efit ( s e e p ara g ra p hs 7 3-9 1); ( b ) dis c o untin g th at ben efit usin g th e P ro je cte d U nit C re d it M eth od in ord er to d ete rm in e th e p re se n t valu e o f th e d efin ed b en efit o blig atio n an d th e cu rre n t s e rv ic e c o st ( s e e p ara g ra p hs 6 5-6 7); ( c ) dete rm in in g t h e f a ir v alu e o f a n y p la n a sse ts ( s e e p ara g ra p hs 1 00-1 02); ( d ) dete rm in in g t h e t o ta l a m ount o f a c tu aria l g ain s a n d l o sse s ( s e e p ara g ra p hs 9 2-9 3 ); ( e ) where a p la n h as b een in tr o duce d o r ch an ged , d ete rm in in g th e re su lt in g p ast s e rv ic e c o st ( s e e p ara g ra p hs 9 4-9 9); a n d ( f ) where a p la n h as b ee n c u rta ile d o r s e tt le d , d ete rm in in g th e r e su ltin g g ain o r lo ss ( s e e p ara g ra p hs 1 10-1 16). W here a n e n te rp ris e h as m ore th an o ne d efin ed b en efit p la n , th e e n te rp ris e a p pli e s th ese p ro ced ure s f o r e ac h m ate ria l p la n s e p ara te ly . 5 2. For m easu rin g th e a m ou nts u nder p ara g ra p h 5 1, in s o m e c a se s, e stim ate s, a v era g es a n d s im plif ie d c o m puta ti o ns m ay p ro vid e a r e li a b le a p pro xim atio n o f t h e d eta il e d c o m puta tio n s. A cco u ntin g f o r t h e O blig a tio n u nder a D efin ed B en efit P la n 5 3. An e n te rp ris e s h ou ld a cco u nt n ot o n ly f o r i t s l e g al o bli g ati o n u nder t h e f o rm al t e rm s o f a d efin ed b en efit p la n , b u t a ls o fo r a n y o th er o b lig atio n th at a ris e s fr o m th e e n te rp ris e ’s i n fo rm al p ra ctic es. I n fo rm al p ra cti c es g iv e r is e to a n o bli g ati o n w here th e e n te rp ris e h as n o r e a lis tic a lt e rn ativ e b u t t o p ay e m plo yee b en efits . A n e x am ple o f s u ch a n o b lig atio n i s w here a c h an ge in th e en te rp ris e ’s in fo rm al pra ctic e s w ou ld ca u se unacce p ta ble dam ag e to its r e la ti o n sh ip w ith e m plo yee s. 5 4. The fo rm al te rm s o f a d efin ed b en efit p la n m ay p erm it a n e n te rp ris e to te rm in ate its o blig ati o n u nder t h e p la n . N ev erth ele ss , it is u su all y d if fic u lt f o r a n e n te rp ris e t o c an ce l a p la n if e m plo yee s a re to b e r e ta in ed . T here fo re , in th e a b se n ce o f e v id en ce to th e c o ntr a ry , a cc o unti n g f o r p ost- e m plo ym en t b en efit s assu m es th at an en te rp ris e w hic h is cu rr e n tl y p ro m is in g su ch b en efits w ill c o ntin ue t o d o s o o ver t h e r e m ain in g w ork in g l i v es o f e m plo yees. B ala n ce S hee t 5 5. The a m ou n t re co gn is e d a s a d efin ed b en efit lia bili ty sh ou ld b e th e n et to ta l o f th e f o llo w in g a m ou nts : 20 (a ) th e p re se n t v a lu e o f t h e d efin ed b en efit o blig atio n a t th e b ala n ce s h eet d a te ( s e e p ara gra ph 6 5); ( b ) min us a n y p ast s e rv ic e c o st n ot y et r e c o gn is e d ( s e e p ara gra ph 9 4); ( c ) min us th e fa ir v a lu e a t th e b ala n ce sh ee t d ate o f p la n a ss e ts (if a n y) o u t o f w hic h t h e o blig atio n s a re t o b e s e ttle d d ir e ctly ( s e e p ara gra ph s 1 00-1 0 2). 5 6. The pre se n t valu e of th e defin ed ben efit obli g atio n is th e gro ss oblig atio n, befo re d ed uctin g t h e f a ir v alu e o f a n y p la n a sse ts . 5 7. An e n te rp ris e s h ou ld d ete rm in e t h e p re se n t v a lu e o f d efin ed b en efit o blig ati o n s a n d t h e f a ir v a lu e o f a n y p la n a sse ts w ith su ffic ie n t re g u la rity th at th e a m ou nts re c o gn is e d in th e f in an cia l s ta te m en ts d o n ot d if f e r m ate ria lly f r o m t h e a m ou nts t h at w ou ld b e d ete rm in ed a t t h e b ala n ce s h eet d a te . 5 8. The d eta ile d a ctu aria l v alu atio n o f t h e p re se n t v alu e o f d efin ed b en efit o b lig atio ns m ay b e m ad e a t in te rv als n ot e x ce ed in g th re e y ears . H ow ev er, w ith a v ie w th at th e a m ounts r e co gn is e d i n t h e f in an cia l s ta te m en ts d o n ot d if f e r m ate ria ll y f ro m t h e a m ounts t h at w ould b e d ete rm in ed a t t h e b ala n ce sh ee t d ate , th e m ost re c en t v alu atio n is re v ie w ed at th e b ala n ce sh eet d ate an d u pdate d to re fle c t an y m ate ria l tr a n sa ctio ns an d oth er m ate ria l ch an ges in cir c u m sta n ces ( in clu din g c h an ges in in te re st ra te s) b etw een th e d ate o f v alu atio n a n d th e b ala n ce s h eet d ate . T he f a ir v alu e o f a n y p la n a sse ts i s d ete rm in ed a t e ac h b ala n ce s h eet d ate . 5 9. The a m ou n t d ete rm in ed u nder p ara gra ph 5 5 m ay b e n eg ativ e ( a n a ss e t) . A n e n te rp ris e s h ou ld m ea su re t h e r e su lti n g a sse t a t t h e l o w er o f: ( a ) th e a m ou nt d ete rm in ed u nder p ara gra ph 5 5; a n d ( b ) th e p re se n t v a lu e o f a n y e co n om ic b en efits a va il a ble in th e fo rm o f re fu n ds f r o m th e p la n o r re d u cti o n s in fu tu re c o n tr ib u ti o n s to th e p la n . T he p re se n t v a lu e o f th ese e co n om ic b en efit s s h ou ld b e d ete rm in ed u sin g th e d is c o u n t r a te s p ecif ie d i n p ara gra p h 7 8. 6 0. An a ss e t m ay a ris e w here a d efin ed b en efit p la n h as b een o verf u nded o r in c erta in c ase s w here a c tu aria l g ain s a re r e c o gn is e d . A n e n te rp ris e r e co gn is e s a n a ss e t i n s u ch c a se s b ecau se : ( a ) th e en te rp ris e co ntr o ls a re so urc e, w hic h is th e ab il ity to use th e su rp lu s to g en era te f u tu re b en efits ; ( b ) th at c o ntr o l is a re su lt o f p ast e v en ts (c o ntr ib uti o ns p aid b y th e e n te rp ris e a n d s e rv ic e r e n dere d b y t h e e m plo yee); a n d ( c ) fu tu re e c o nom ic b en efits a re a v aila b le to t h e e n te rp ris e in th e f o rm o f a r e d ucti o n i n fu tu re co ntr ib utio ns or a ca sh re fu nd, eit h er dir e ctly to th e en te rp ris e or i n dir e ctly t o a n oth er p la n i n d efic it. E xam ple I llu str a tin g P ara gra p h 5 9 (A m ount i n R s.) A d efin ed b en efit p la n h as t h e f o ll o w in g c h ara cte ris tic s: P re se n t v alu e o f t h e o blig atio n 1 ,1 00 21 F air v alu e o f p la n a sse ts (1 ,1 90) (9 0) U nre c o gn is e d p ast s e rv ic e c o st ( 7 0) N eg ativ e a m ount d ete rm in ed u nder p ara g ra p h 5 5 (1 60) P re se n t v alu e o f a v aila b le f u tu re r e fu nds a n d r e d uctio n s i n f u tu re c o ntr ib utio ns 9 0 L im it u nder p ara gra ph 5 9 ( b ) 9 0 R s. 9 0 is le ss th an R s. 1 60. T here fo re , th e e n te rp ris e r e co gnis e s a n asse t o f R s. 9 0 a nd d is c lo se s th at th e li m it re d u ced th e ca rry in g am ount o f t h e a sse t b y R s. 7 0 ( s e e p ara gra ph 119120(cf)(vii) ). S ta te m en t o f P ro fit a n d L oss 6 1. An e n te rp ris e s h ou ld r e c o gn is e th e n et to ta l o f th e f o ll o w in g a m ou nts in th e s ta te m en t o f p ro fit a n d lo ss, e x cep t to th e e x te n t th at a n oth er A cco u nti n g S ta n dard r e q u ir e s o r p erm its t h eir i n clu sio n i n t h e c o st o f a n a sse t: ( a ) cu rr e n t s e rv ic e c o st ( s e e p ara gra ph s 6 4-9 1); ( b ) in te re st c o st ( s e e p a ra gra ph 8 2); ( c ) th e e x pecte d re tu rn o n a n y p la n a sse ts (s e e p ara gra ph s 1 07-1 09 ) a n d o n a n y r e im bu rse m en t r ig h ts ( s e e p ara gra ph 1 0 3); ( d ) actu aria l g ain s a n d l o sse s ( s e e p ara gra ph s 9 2-9 3); ( e ) past se rv ic e co st to th e ex te n t th at para gra ph 94 re q u ir e s an en te rp ris e to r e co gn is e i t ; ( f) th e e ffe ct o f a n y c u rta ilm en ts o r s e tt le m en ts ( s e e p ara gra ph s 1 10 a n d 1 11); a n d ( g ) th e e ffe ct o f th e li m it in p ara gra ph 5 9 ( b ), i.e ., th e e x te n t to w hic h th e a m ou nt d ete rm in ed u nder p ara g ra ph 5 5 (if n eg ativ e ) e x ce ed s th e a m ou nt d ete rm in ed u n der p ara gra ph 5 9 ( b ). 6 2. Oth er A cco un tin g S ta n dard s re q uir e th e in clu sio n of certa in em plo yee ben efit co sts w ith in th e c o st o f a sse ts s u ch a s ta n gib le f ix ed a sse ts ( s e e A S 1 0 A cc o unti n g fo r F ix e d A ss e ts ). A ny p ost- e m plo ym en t b en efit c o sts in clu d ed in th e c o st o f s u ch a sse ts in clu d e th e a p pro pria te p ro porti o n o f t h e c o m po nen ts l is te d i n p ara g ra p h 6 1. I llu str a tiv e E xam ple 6 3. Appen d ix A c o nta in s a n e x am ple d esc rib in g th e c o m ponen ts o f th e a m ounts r e co gn is e d i n t h e b ala n ce s h eet a n d s ta te m en t o f p ro fit a n d l o ss i n r e sp ec t o f d efin ed b en efit p la n s. R eco g n it io n a n d M ea su rem en t: P rese n t V alu e o f D efin ed B en efit O blig atio n s a n d C urren t S erv ic e C ost 6 4. The u lti m ate c o st o f a d efin ed b en efit p la n m ay b e i n flu en ced b y m an y v aria b le s, s u ch a s f in al s a la rie s, e m plo yee tu rn over a n d m orta lity , m ed ic al c o st tr e n ds a n d , f o r a f u nded p la n , th e 22 in vestm en t ea rn in gs o n th e p la n ass e ts . T he u lti m ate co st o f th e p la n is u ncerta in an d th is u ncerta in ty i s l ik ely t o p ers is t o ver a l o n g p erio d o f t im e. I n o rd er t o m easu re t h e p re se n t v alu e o f t h e p ost- e m plo ym en t b en efit o bli g atio ns a n d t h e r e la te d c u rre n t s e rv ic e c o st, i t i s n ec essa ry t o : ( a ) ap ply a n a c tu aria l v alu atio n m eth o d ( s e e p ara g ra p hs 6 5-6 7); ( b ) att r ib ute b en efit t o p erio ds o f s e rv ic e ( s e e p ara g ra p hs 6 8-7 2); a n d ( c ) mak e a ctu aria l a ssu m pti o ns ( s e e p ara g ra p hs 7 3-9 1). A ctu aria l V alu atio n M eth od 6 5. An e n te rp ris e s h ou ld u se th e P ro je cte d U nit C re d it M eth od to d ete rm in e th e p re se n t v a lu e of its defin ed ben efit oblig ati o n s an d th e re la te d cu rre n t se rv ic e co st an d, w here a ppli c a ble , p ast s e rv ic e c o st. 6 6. The P ro je cte d U nit C re d it M eth od ( s o m etim es k now n a s t h e a cc ru ed b en efit m eth o d p ro - r a te d o n s e rv ic e o r a s th e b en efit /y ea rs o f s e rv ic e m eth od) c o nsid ers e ach p erio d o f s e rv ic e a s g iv in g r is e to a n a d ditio nal u nit o f b en efit e n ti tle m en t ( s e e p ara g ra p hs 6 8 -7 2) a n d m easu re s e a ch u nit s e p ara te ly t o b uil d u p t h e f in al o blig atio n ( s e e p ara g ra p hs 7 3-9 1). 6 7. An e n te rp ris e d is c o unts th e w hole o f a p ost- e m plo ym en t b en efit o blig ati o n, e v en if p art o f t h e o blig ati o n f a ll s d ue w ith in t w elv e m onth s o f t h e b ala n ce s h eet d ate . Exam ple I llu str a tin g P ara gra p h 6 6 A l u m p s u m b en efit , e q ual to 1 % o f f in al s a la ry f o r e ac h y ear o f s e rv ic e , i s p ay ab le o n te rm in atio n o f s e rv ic e. T he s a la ry i n ye a r 1 i s R s. 1 0,0 00 a n d i s a ssu m ed t o i n cre a se a t 7 % ( c o m po und) e ac h y ear r e su lt in g i n R s. 1 3,1 0 0 a t th e e n d o f y ea r 5 . T he d is c o unt r a te u se d i s 1 0% p er a n num . T he f o llo w in g ta b le s h ow s h ow t h e o blig atio n b uild s u p f o r a n e m plo yee w ho i s e x pecte d to le av e at th e en d of year 5, ass u m in g th at th ere are no ch an ges in ac tu aria l a ssu m pti o ns. F or s im plic it y , th is e x am ple ig n ore s th e a d dit io nal a d ju stm en t n ee d ed to re fle ct th e p ro bab ilit y th at th e e m plo yee m ay le av e th e e n te rp ris e a t a n e a rlie r o r l a te r d ate . ( A m ount i n R s.) Y ea r 1 2 3 4 5 B en efi t a tt r ib ute d t o : - p rio r y e a rs 0 13 1 26 2 39 3 52 4 - c u rre n t y ea r ( 1 % o f f i n al s a la ry ) 13 1 13 1 13 1 13 1 13 1 - c u rre n t a nd p rio r y e a rs 13 1 26 2 39 3 52 4 65 5 O pen in g O blig ati o n ( s e e n ote 1 ) - 89 19 6 32 4 47 6 In te re st a t 1 0% - 9 20 33 48 C urre n t S erv ic e C ost ( s e e n ote 2 ) 89 98 10 8 11 9 13 1 C lo sin g O bli g ati o n ( s e e n ote 3 ) 89 19 6 32 4 47 6 65 5 23 N ote s: 1 . T he O pen in g O blig atio n i s t h e p re se n t v a lu e o f b en efit a tt r ib ute d t o prio r y ea rs. 2 . The C urre n t S erv ic e C ost is th e p re se n t v a lu e o f b en efit a tt r ib ute d to t h e c u rr e n t y ea r. 3 . T he C lo sin g O bli g ati o n is th e p re se n t v a lu e o f b en efi t a ttr ib ute d to cu rre n t a nd p rio r y ea rs. A ttr ib utin g B en efit t o P erio d s o f S erv ic e 6 8. In d ete rm in in g th e p re se n t va lu e o f it s d efin ed b en efit o bli g ati o n s a n d th e re la te d c u rr e n t se rv ic e c o st a n d, w here a ppli c a ble , p ast se rv ic e c o st, a n e n te rp ris e sh ou ld a ttr ib u te b en efit to p erio ds o f se rv ic e u nder th e p la n ’s b en efit fo rm ula . H ow ev er, if a n em plo ye e’s s e rv ic e in la te r y ea rs w il l le a d to a m ate ria lly h ig h er le ve l o f b en efit th an in e a rli e r y ea rs, a n e n te rp ris e s h ou ld a ttr ib u te b en efit o n a s tr a ig h t- li n e b asis f r o m : ( a ) th e d ate w hen se rv ic e b y th e e m plo ye e fir st le a ds to b en efits u nder th e p la n ( w heth er o r n ot t h e b en efits a re c o n diti o n al o n f u rth er s e rv ic e ); u nti l ( b ) th e d ate w hen f u rth er s e rv ic e b y th e e m plo yee w ill le a d to n o m ate ria l a m ou nt o f f u rth er b en efits u nder t h e p la n , o th er t h an f r o m f u rth er s a la ry i n cre a se s. 6 9. The P ro je cte d U nit C re d it M eth od r e q u ir e s a n e n te rp ris e t o a ttr ib ute b en efit t o t h e c u rre n t p erio d ( in o rd er to d ete rm in e c u rre n t s e rv ic e c o st) a n d th e c u rre n t a n d p rio r p erio ds ( in o rd er to d ete rm in e th e p re se n t v alu e o f d efin ed b en efit o blig atio ns). A n e n te rp ris e a ttr ib ute s b en efit to p erio ds in w hic h th e o blig ati o n to p ro vid e p ost- e m plo ym en t b en efit s aris e s. T hat o bli g atio n a ris e s a s e m plo yee s r e n der s e rv ic es in r e tu rn f o r p ost- e m plo ym en t b en efit s w hic h a n e n te rp ris e e x pec ts to p ay in fu tu re re p ortin g p erio ds. A ctu aria l te c h niq u es a ll o w a n e n te rp ris e to m ea su re t h at o blig atio n w it h s u ffic ie n t r e li a b ilit y t o j u stif y r e c o gn it io n o f a l ia b ili ty . 24 E xam ple s I ll u str a tin g P ara gra p h 6 9 1. A defin ed ben efit pla n pro vid es a lu m p-su m ben efit of R s. 100 pay ab le on re tir e m en t f o r e ac h y ear o f s e rv ic e. A b en efi t o f R s. 1 00 i s a tt r ib ute d t o ea ch y ea r. T he c u rre n t s e rv ic e c o st i s th e p re se n t v a lu e o f R s. 1 00. T he p re se n t v a lu e o f th e d efi n ed b en efit o bli g ati o n is th e p re se n t v a lu e o f R s. 1 00, m ult ip lie d b y th e n um ber o f y ea rs o f s e rv ic e u p t o t h e b a la nce s h eet d ate . I f th e ben efit is paya ble im m ed ia te ly when th e em plo yee le a ves th e en te rp ris e , th e cu rr e n t se rv ic e co st a nd th e p re se n t va lu e o f th e d efin ed ben efit o bli g ati o n r e fle c t t h e d ate a t w hic h t h e e m plo yee i s e x p ecte d t o l e a ve. T hus, b ec a use o f t h e e ffe c t o f d is c o untin g, t h ey a re l e ss t h an th e a m ounts t h at w ou ld b e d ete rm in ed i f t h e e m plo ye e l e ft a t t h e b ala nce s h ee t d ate . 2 . A p la n p ro vid es a m onth ly p en sio n o f 0 .2 % o f f in al s a la ry f o r e a ch y ear o f s e rv ic e . T he p en sio n i s p ay ab le f r o m t h e a g e o f 6 0. B en efit eq ual to th e p re se n t va lu e, a t the exp ecte d re tir e m en t d ate , o f a m onth ly pen sio n of 0.2 % o f th e estim ate d fin al sa la ry p aya ble fr o m th e exp ec te d r e tir e m en t d ate u nti l t h e e x p ecte d d ate o f d ea th i s a ttr ib ute d t o e a ch yea r o f s e rv ic e . T he c u rre n t s e rv ic e c o st is th e p re se n t v a lu e o f th at be n efi t. T he p re se n t v a lu e o f th e d efin ed b en efit o blig ati o n is th e p re se n t v a lu e o f m onth ly p en sio n p aym en ts o f 0 .2 % o f fi n al s a la ry , m ultip lie d b y th e n um ber o f y e a rs o f s e rv ic e u p to th e b ala n ce s h eet d ate . T he c u rre n t s e rv ic e c o st a nd th e p re se n t v a lu e o f th e d efin ed b en efi t o bli g ati o n a re d is c o unte d b eca use p en sio n p aym en ts b eg in a t t h e a ge o f 6 0. 7 0. Em plo yee se rv ic e g iv es ris e to a n o bli g ati o n u nder a d efin ed b en efit p la n e v en if th e b en efits a re c o nditio nal o n fu tu re e m plo ym en t (in o th er w ord s th ey a re n ot v este d ). E m plo yee s e rv ic e b efo re th e v estin g d ate g iv es ris e to a n o blig atio n b ecau se , a t e ac h s u cce ss iv e b ala n ce s h eet d ate , th e a m ount o f fu tu re s e rv ic e th at a n e m plo yee w il l h av e to re n der b efo re b eco m in g e n ti tle d to th e b en efit is re d uce d . In m easu rin g it s d efin ed b en efit o blig atio n, an en te rp ris e c o nsid ers th e pro bab ilit y th at so m e em plo yees m ay not sa tis fy an y vestin g re q uir e m en ts . S im ila rly , a lth ough c e rta in p ost- e m plo ym en t b en efits , fo r e x am ple , p ost- e m plo ym en t m ed ic a l b en efits , beco m e p ay ab le o n ly if a sp ec if ie d ev en t o ccu rs w hen an em plo yee is n o lo nger e m plo yed , an obli g ati o n is cre ate d w hen th e em plo yee re n ders se rv ic e th at w il l pro vid e e n ti tle m en t to th e b en efit if th e s p ecif ie d e v en t o cc u rs . T he p ro b ab il ity th at th e s p ecif ie d e v en t w ill occu r affe cts th e m ea su re m en t of th e oblig atio n, but does not dete rm in e w heth er th e o blig ati o n e x is ts . 25 E xam ple s I ll u str a tin g P ara gra p h 7 0 1. A p la n p ay s a b en efit o f R s. 1 0 0 f o r e a ch y ea r o f s e rv ic e. T he b en efits v est a fte r t e n yea rs o f s e rv ic e. A b en efit o f R s. 1 00 is a ttr ib ute d to e a ch y ea r. I n e a ch o f th e fi r s t te n y e a rs , t h e c u rre n t s e rv ic e c o st a nd th e p re se n t v a lu e o f th e o blig a tio n r e fle c t th e p ro babili ty t h at t h e e m plo yee m ay n ot c o m ple te t e n y ea rs o f s e rv ic e . 2 . A p la n p ay s a b en efit o f R s. 1 00 fo r e ac h y ea r o f s e rv ic e, e x clu din g s e rv ic e b efo re th e a g e o f 2 5. T he b en efit s v est i m med ia te ly . N o b en efi t i s a ttr ib ute d t o s e rv ic e b efo re t h e a g e o f 2 5 b eca use s e rv ic e b efo re th at d ate d oes n ot l e a d t o b en efits ( c o nditi o nal o r u nco ndit io nal) . A b en efi t o f R s. 1 00 i s a tt r ib ute d t o e a ch s u bse q uen t y ea r. 7 1. The o blig atio n in cre a se s u nti l th e d ate w hen f u rth er s e rv ic e b y th e e m plo yee w ill le ad to n o m ate ria l a m ount o f f u rth er b en efits . T here fo re , a ll b en efit i s a ttr ib ute d t o p erio ds e n din g o n o r b efo re th at d ate . B en efit is a ttr ib ute d to in div id u al a cco u ntin g p erio d s u nd er th e p la n ’s b en efit f o rm ula . H ow ev er, i f a n e m plo yee ’s s e rv ic e i n l a te r y ea rs w il l l e a d t o a m ate ria lly h ig h er l e v el o f b en efit th an in e arlie r y ea rs , a n e n te rp ris e a ttr ib ute s b en efit o n a s tr a ig h t- li n e b asis u ntil th e d ate w hen f u rth er s e rv ic e b y t h e e m plo yee w il l le a d t o n o m ate ria l a m ount o f f u rth er b en efits . T hat i s b eca u se t h e e m plo yee’s s e rv ic e t h ro ugh out t h e e n ti r e p erio d w ill u lt im ate ly l e a d t o b en efit a t t h at h ig h er l e v el. 26 E xam ple s I ll u str a tin g P ara gra p h 7 1 1. A p la n p ay s a lu m p-su m b en efit o f R s. 1 ,0 00 th at v ests a fte r te n y ears o f s e rv ic e. T he p la n p ro vid es n o f u rth er b en efit f o r s u bse q uen t s e rv ic e. A b en efit o f R s. 1 00 (R s. 1 ,0 00 d iv id ed b y te n ) is a ttr ib ute d to e a ch o f th e fir st te n y ea rs. T he c u rr e n t s e rv ic e c o st in e a ch o f t h e f ir st t e n y ea rs r e fle c ts th e p ro bab ili ty th at th e e m plo ye e m ay n ot c o m ple te te n y e a rs o f s e rv ic e . N o ben efit i s a ttr ib u te d t o s u bse q uen t y ea rs. 2 . A p la n p ay s a lu m p-s u m r e ti r e m en t b en efit o f R s. 2 ,0 00 to all e m plo yee s w ho a re stil l em plo yed at th e ag e o f 5 0 afte r tw en ty y ea rs o f se rv ic e, o r w ho are sti ll e m plo yed a t t h e a g e o f 6 0, r e g ard le ss o f t h eir l e n gth o f s e rv ic e. F or e m plo yees w ho jo in b efo re th e a ge o f 3 0, s e rv ic e fi r s t le a ds to b en efi ts u nd er th e p lan a t th e a g e o f 3 0 (a n e m plo yee c o uld le a ve a t th e a ge o f 2 5 and re tu rn a t th e a ge o f 2 8, w ith n o effe c t o n th e a m ount o r ti m in g o f b en efits ). T hose b en efit s a re c o nditio n al o n fu rth er se rv ic e . A ls o , se rv ic e b eyo nd t h e a ge o f 5 0 w il l l e a d t o n o m ate ria l am ou nt o f f u rth er b en efit s . F or th ese em plo ye es, th e en te rp ris e attr ib ute s ben efit of R s. 100 (R s. 2 ,0 0 0 div id ed b y 2 0) t o e a ch y e a r f r o m t h e a ge o f 3 0 t o t h e a ge o f 5 0. F or e m plo yee s w ho jo in b etw ee n th e a ges o f 3 0 a nd 4 0, se rv ic e b ey o n d tw en ty y e a rs w ill l e a d to n o m ate ria l a m oun t o f fu rth er b en efits . F or th ese e m plo ye es, th e e n te rp ris e a ttr ib ute s b en efi t o f R s. 1 00 ( R s. 2 ,0 00 d iv id ed b y 2 0) t o e a ch o f t h e f i r s t t w en ty y ea rs. F or a n e m plo yee w ho jo in s a t th e a ge o f 5 0, s e rv ic e b eyo nd te n y ea rs w il l l e a d to no m ate ria l am ount of fu rth er ben efit s . F or th is em plo yee , th e e n te rp ris e a ttr ib ute s b en efit o f R s. 2 00 (R s. 2 ,0 00 d iv id ed b y 1 0) to e a ch o f t h e f ir st t e n y e a rs. F or a ll e m plo ye es, th e c u rre n t se rv ic e c o st a nd th e p re se n t v a lu e o f th e o blig atio n re fl e ct th e p ro babilit y th at th e e m plo yee m ay n ot c o m ple te th e n ecessa ry p erio d o f s e rv ic e. 3 . A post- e m plo ym en t m ed ic a l pla n re im bu rs e s 40% of an em plo yee’s po st- e m plo ym en t m ed ic al c o sts i f th e e m plo yee l e a v es a fte r m ore th an te n a n d le ss t h an tw en ty y ea rs o f s e rv ic e a n d 5 0% o f th ose c o sts if t h e e m plo yee le av es a fte r t w en ty o r m ore y ears o f s e rv ic e. U nder t h e p la n’s b en efi t f o rm ula , t h e e n te rp ris e a ttr ib ute s 4 % o f t h e p re se n t v a lu e o f th e e x p ecte d m ed ic a l c o sts ( 4 0% d iv id ed b y te n ) t o e a ch o f t h e f ir st t e n y ea rs a nd 1 % ( 1 0% d iv id ed b y te n ) to e a ch o f th e s e c o nd t e n y ea rs. T he cu rr e n t s e rv ic e c o st in e a ch y ea r r e fle c ts th e p ro babil it y th at th e e m plo ye e m ay n ot c o m ple te th e n ecessa ry p erio d o f s e rv ic e to e a rn p art o r a ll o f th e b en efits . F or e m plo yee s e x p ecte d to le a ve w it h in te n y ea rs, n o b en efit is a ttr ib ute d . 4 . A post- e m plo ym en t m ed ic a l pla n re im bu rs e s 10% of an em plo yee’s po st- e m plo ym en t m ed ic al c o sts i f th e e m plo yee l e a v es a fte r m ore th an te n a n d le ss t h an tw en ty y ea rs o f s e rv ic e a n d 5 0% o f th ose c o sts if t h e e m plo yee le av es a fte r t w en ty o r m ore y ears o f s e rv ic e. 27 S erv ic e i n l a te r y ea rs w ill l e a d t o a m ate ria ll y h ig her l e v el o f b en efi t t h an i n ea rlie r y e a rs . T here fo re , fo r e m plo yee s e x p ec te d to le a ve a fte r tw en ty o r m ore y ea rs, th e e n te rp ris e a tt r ib ute s b en efit o n a s tr a ig ht-l in e b asis u nd er p ara gra ph 6 9. S erv ic e b eyo nd tw en ty y e a rs w il l l e a d to n o m ate ria l a m ou n t o f fu rth er b en efit s . T here fo re , th e b en efit a tt r ib ute d to ea ch o f th e fir st t w en ty y ea rs i s 2 .5 % o f t h e p re se n t v a lu e o f t h e e xp ecte d m ed ic a l c o sts ( 50 % div id ed b y t w en ty ). F or e m plo yees e xp ec te d to le a ve b etw ee n te n a nd tw en ty y e a rs, th e b en efi t a ttr ib ute d to e a ch o f th e fir st te n y e a rs is 1 % o f th e p re se n t v a lu e o f th e e xp ec te d m ed ic a l co sts . F or th ese em plo yees, n o b en efit is a ttr ib ute d to se rv ic e b etw ee n t h e e n d o f t h e t e n th y e a r a nd t h e e stim ate d d a te o f l e a vin g . F or e m plo ye es e xp ec te d t o l e a ve w ith in t e n y ea rs, n o b en efit i s a tt r ib ute d . 7 2. Where th e a m ount o f a b en efit is a c o nsta n t p ro po rtio n o f fin al s a la ry fo r e a ch y ear o f s e rv ic e, f u tu re s a la ry in cre ase s w il l a ffe c t th e a m ou nt r e q uir e d t o s e tt le th e o blig atio n th at e x is ts f o r s e rv ic e b efo re t h e b ala n ce s h eet d ate , b ut d o n ot c re a te a n a d ditio nal o bli g atio n. T here fo re : ( a ) fo r t h e p urp ose o f p ara g ra p h 6 8(b ), s a la ry i n cre ase s d o n ot l e a d t o f u rth er b en efit s , e v en t h o ugh t h e a m ount o f t h e b en efits i s d ep en den t o n f in al s a la ry ; a n d ( b ) th e a m ount o f b en efit a ttr ib ute d to e ach p erio d is a c o nsta n t p ro porti o n o f th e s a la ry t o w hic h t h e b en efit i s l in ked . E xam ple I ll u str a tin g P ara gra p h 7 2 E m plo yee s a re e n ti tle d to a b en efit o f 3 % o f fin al sa la ry fo r e a ch y ea r o f s e rv ic e b efo re t h e a g e o f 5 5. B en efit o f 3 % o f e stim ate d fin a l s a la ry is a ttr ib ute d to e a ch y e a r u p to th e a ge o f 5 5. T his is th e d ate w hen fu rth er s e rv ic e b y th e e m plo yee w il l le a d to no m ater ia l am ount of fu rth er ben efi ts under th e pla n. N o ben efit is a ttr ib ute d t o s e rv ic e a fte r t h a t a ge. A ctu aria l A ssu m ptio n s 7 3. Actu aria l assu m ptio n s co m pris in g dem ogra ph ic assu m pti o n s an d fin an cia l a ss u m ptio n s s h ou ld b e u nbia se d a n d m utu ally c o m patib le . F in an cia l a ss u m ptio n s s h ou ld b e b ase d on m ark et ex pecta tio n s, at th e bala n ce sh ee t date , fo r th e perio d over w hic h th e o blig atio n s a re t o b e s e ttle d . 7 4. Actu aria l assu m ptio ns are an en te rp ris e ’s best estim ate s of th e varia b le s th at w il l d ete rm in e th e ulti m ate co st of pro vid in g po st- e m plo ym en t ben efits . A ctu aria l assu m ptio ns c o m pris e : ( a ) dem ogra p hic a ssu m ptio ns a b out th e fu tu re c h ara c te ris tic s o f c u rre n t a n d fo rm er e m plo yee s (a n d th eir d ep en dan ts ) w ho are eli g ib le fo r b en efits . D em ogra p hic a ssu m pti o ns d eal w ith m att e rs s u ch a s: ( i) morta lity , b oth d urin g a n d a fte r e m plo ym en t; 28 (ii) ra te s o f e m plo yee t u rn over, d is a b il ity a n d e arly r e tir e m en t; ( iii ) th e p ro portio n o f p la n m em bers w it h d ep en dan ts w ho w ill b e e lig ib le f o r b en efit s ; a n d ( iv ) cla im r a te s u nder m ed ic al p la n s; a n d ( b ) fin an cia l a ssu m pti o ns, d ealin g w ith i t e m s s u ch a s: ( i) th e d is c o unt r a te ( s e e p ara g ra p hs 7 8-8 2); ( ii) fu tu re s a la ry a n d b en efit l e v els ( s e e p ara g ra p hs 8 3 -8 7); ( iii ) in th e ca se o f m ed ic a l b en efits , fu tu re m ed ic al c o sts , in clu din g, w here m ate ria l, th e co st of ad m in is te rin g cla im s an d ben efit pay m en ts (s e e p ara g ra p hs 8 8-9 1); a n d ( iv ) th e e x pec te d r a te o f r e tu rn o n p la n a ss e ts ( s e e p ara g ra p hs 1 07-1 0 9). 7 5. Actu aria l assu m pti o ns are unbia se d if th ey are neit h er im pru den t nor ex cessiv ely c o nse rv ativ e. 7 6. Actu aria l a ssu m pti o ns a re m utu ally c o m pati b le if th ey r e fle ct t h e e co nom ic r e la tio nsh ip s b etw een f a cto rs s u ch a s in fla ti o n, r a te s o f s a la ry in cre ase , th e r e tu rn o n p la n a ss e ts a n d d is c o u nt r a te s. F or ex am ple , all ass u m pti o ns w hic h dep en d on a parti c u la r in fla tio n le v el (s u ch as a ssu m pti o ns a b out in te re st ra te s a n d sa la ry a n d b en efit in cre ase s) in a n y g iv en fu tu re p erio d a ssu m e t h e s a m e i n fla ti o n l e v el i n t h at p erio d. 7 7. An e n te rp ris e d ete rm in es th e d is c o unt ra te a n d o th er fin an cia l a ss u m ptio ns in n o m in al ( s ta te d ) te rm s, u nle ss e stim ate s in r e a l ( in fla tio n-a d ju ste d ) te rm s a re m ore r e li a b le , f o r e x am ple , w here th e b en efit is in dex -lin ked a n d th ere is a d eep m ark et in in dex -lin ked b onds o f th e s a m e c u rre n cy a n d t e rm . A ctu aria l A ssu m ptio n s: D is c o u nt R ate 7 8. The ra te use d to dis c o u nt post- e m plo ym en t ben efit obli g ati o n s (b oth fu nded an d u n fu nded ) s h ou ld b e d ete rm in ed b y r e fe re n ce to m ark et y ie ld s a t th e b ala n ce s h eet d a te o n g overn m en t b on ds. T he c u rre n cy a n d t e rm o f t h e g ove rn m en t b on ds s h ou ld b e c o n sis te n t w ith t h e c u rr e n cy a n d e stim ate d t e rm o f t h e p ost- e m plo ym en t b en efit o blig atio n s. 7 9. One a ctu aria l a ssu m ptio n w hic h h as a m ate ria l e ffe c t is th e d is c o unt ra te . T he d is c o u nt r a te re fle cts th e tim e v alu e o f m oney b ut n ot th e a ctu aria l o r in vestm en t ris k . F urth erm ore , th e d is c o unt ra te does not re fle ct th e en te rp ris e -s p ecif ic cre d it ris k bo rn e by th e en te rp ris e ’s c re d ito rs , n or d oes i t r e fle c t t h e r is k t h at f u tu re e x perie n ce m ay d if fe r f ro m a c tu aria l a ssu m pti o ns. 8 0. The dis c o unt ra te re fle cts th e estim ate d ti m in g o f b en efit p ay m en ts . In p ra ctic e , an e n te rp ris e o fte n a ch ie v es th is b y a p ply in g a s in gle w eig h te d a v era g e d is c o unt ra te th at re fle cts t h e e stim ate d tim in g a n d a m ount o f b en efit p ay m en ts a n d th e c u rre n cy i n w hic h t h e b en efits a re t o b e p aid . 8 1. In s o m e c ase s, th ere m ay b e n o g o vern m en t b onds w ith a s u ffic ie n tl y lo ng m atu rit y to m atc h th e estim ate d m atu rit y o f all th e b en efit p ay m en ts . In su ch case s, an en te rp ris e u se s c u rre n t m ark et r a te s o f t h e a p pro p ria te t e rm t o d is c o unt s h orte r t e rm p ay m en ts , a n d e stim ate s t h e d is c o unt ra te fo r lo nger m atu ritie s b y e x tr a p ola tin g c u rre n t m ark et ra te s a lo ng th e y ie ld c u rv e. T he to ta l p re se n t v alu e o f a d efin ed b en efit o bli g atio n is u nlik ely to b e p artic u la rly s e n sit iv e to 29 th e d is c o unt r a te a p pli e d t o t h e p ortio n o f b en efits t h at i s p ay ab le b ey ond t h e f in al m atu rit y o f t h e a v aila b le g o vern m en t b onds. 8 2. In te re st c o st i s c o m pute d b y m ultip ly in g t h e d is c o unt r a te a s d ete rm in ed a t t h e s ta rt o f t h e p erio d b y th e p re se n t v alu e o f th e d efin ed b en efit o bli g atio n th ro ugh ou t th at p erio d, ta k in g a cc o unt o f a n y m ate ria l c h an ges in th e o bli g atio n. T he p re se n t v alu e o f th e o blig atio n w il l d if fe r f ro m th e li a b il ity re co gnis e d in th e bala n ce sh ee t becau se th e lia b ili ty is re co gn is e d afte r d ed uctin g th e f a ir v alu e o f a n y p la n a ss e ts a n d b ecau se s o m e p ast s e rv ic e c o st a re n o t r e co gn is e d i m m ed ia te ly . [ A ppen dix A i ll u str a te s t h e c o m puta tio n o f i n te re st c o st, a m ong o th er t h in gs] A ctu aria l A ssu m ptio n s: S ala rie s, B en efit s a n d M ed ic a l C osts 8 3. Post- e m plo ym en t b en efit o bli g ati o n s s h ou ld b e m ea su re d o n a b asis t h at r e fle cts : ( a ) estim ate d f u tu re s a la ry i n cre a se s; ( b ) th e b en efits s e t o u t in th e te rm s o f th e p la n (o r r e su ltin g fr o m a n y o b lig atio n t h at g oes b eyo n d t h ose t e rm s) a t t h e b ala n ce s h eet d ate ; a n d ( c ) estim ate d f u tu re c h an ges i n t h e l e ve l o f a n y s ta te b en efits t h at a ffe c t t h e b en efits p aya ble u n der a d efin ed b en efit p la n , i f , a n d o n ly i f , e ith er: ( i) th ose c h an ges w ere e n acte d b efo re t h e b ala n ce s h eet d ate ; o r ( ii) past h is to ry , o r o th er r e lia ble e vid en ce , i n dic a te s t h at t h ose s ta te b en efits w il l c h an ge i n s o m e p re d ic ta ble m an n er, f o r e x am ple , i n l in e w it h f u tu re c h an ges i n g en era l p ric e l e ve ls o r g en era l s a la ry l e ve ls . 8 4. Estim ate s o f fu tu re s a la ry in cre ase s ta k e a c co unt o f in fla tio n, s e n io rity , p ro m oti o n a n d o th er r e le v an t f a c to rs , s u ch a s s u pply a n d d em an d i n t h e e m plo ym en t m ark et. 8 5. If th e f o rm al te rm s o f a p la n (o r a n o blig atio n th at g o es b ey o nd th o se te rm s) r e q uir e a n e n te rp ris e to c h an ge b en efits in f u tu re p erio ds, th e m easu re m en t o f th e o blig atio n r e fle cts th ose c h an ges. T his i s t h e c a se w hen , f o r e x am ple : ( a ) th e e n te rp ris e h as a p ast h is to ry o f in cre asin g b en efits , fo r e x am ple , to m iti g ate t h e e ffe c ts o f in fla tio n , a n d th ere is n o in dic atio n th at th is p ra c ti c e w ill c h an ge in t h e f u tu re ; o r ( b ) actu aria l g ain s h av e a lr e ad y b een re co gn is e d in th e fin an cia l s ta te m en ts a n d th e e n te rp ris e is o blig ed , b y e ith er th e fo rm al te rm s o f a p la n (o r a n o blig ati o n th at g o es b ey o nd th ose te rm s) o r le g is la tio n, to u se a n y su rp lu s in th e p la n fo r th e b en efit o f p la n p artic ip an ts ( s e e p ara g ra p h 9 6 (c )). 8 6. Actu aria l a ssu m ptio ns d o n ot re fle ct fu tu re b en efit c h an ges th at a re n ot se t o ut in th e f o rm al t e rm s o f t h e p la n ( o r a n o b lig ati o n t h at g o es b ey ond t h ose t e rm s) a t t h e b ala n ce s h ee t d ate . S uch c h an ges w il l r e su lt i n : ( a ) past se rv ic e c o st, to th e e x te n t th at th ey c h an ge b en efits fo r s e rv ic e b efo re th e c h an ge; a n d ( b ) cu rre n t se rv ic e c o st fo r p erio ds a fte r th e c h an ge, to th e e x te n t th at th ey c h an ge b en efits f o r s e rv ic e a fte r t h e c h an ge. 30 8 7. Som e po st- e m plo ym en t ben efit s are lin ked to varia b le s su ch as th e le v el of sta te r e ti r e m en t b en efits o r s ta te m ed ic al c are . T he m easu re m en t o f s u ch b en efit s re fle cts e x pecte d c h an ges i n s u ch v aria b le s, b ase d o n p ast h is to ry a n d o th er r e lia b le e v id en ce. 8 8. Assu m pti o n s a bou t m ed ic a l c o sts s h ou ld ta ke a cco u nt o f e stim ate d fu tu re c h an ges in t h e c o st o f m ed ic a l se rv ic e s, re su lt in g fr o m b o th in fla ti o n a n d sp ecif ic c h an ges in m ed ic a l c o sts . 8 9. Mea su re m en t o f p ost- e m plo ym en t m ed ic al b en efits r e q uir e s a ssu m ptio ns a b out th e le v el a n d fre q uen cy o f fu tu re c la im s a n d th e c o st o f m eetin g th ose c la im s. A n e n te rp ris e e sti m ate s f u tu re m ed ic a l co sts o n th e basis of h is to ric al data ab out th e en te rp ris e ’s o w n ex perie n ce, s u pp le m en te d w here n ece ss a ry b y h is to ric al d ata fro m o th er e n te rp ris e s, in su ra n ce c o m pan ie s, m ed ic a l p ro vid ers o r o th er so urc es. E stim ate s o f fu tu re m ed ic a l c o sts c o nsid er th e e ffe ct o f t e c h nolo gic a l a d van ces, c h an ges i n h ealt h c are u ti li s a tio n o r d eli v ery p atte rn s a n d c h an ges i n t h e h ealth s ta tu s o f p la n p artic ip an ts . 9 0. The le v el a n d fre q u en cy o f c la im s is p artic u la rly s e n sit iv e to th e a g e, h ealt h s ta tu s a n d s e x of em plo yees (a n d th eir dep en d an ts ) an d m ay be se n siti v e to oth er fa cto rs su ch as g eo gra p hic al lo catio n. T here fo re , h is to ric al d ata is a d ju ste d to th e e x te n t th at th e d em ogra p hic m ix o f t h e p opula tio n d if fe rs f ro m t h at o f t h e p opula tio n u se d a s a b asis f o r t h e h is to ric a l d ata . I t i s a ls o a d ju ste d w here t h ere i s r e lia b le e v id en ce t h at h is to ric al t r e n ds w il l n ot c o ntin ue. 9 1. Som e p ost- e m plo ym en t h ealth c are p la n s r e q uir e e m plo yee s to c o ntr ib ute to th e m ed ic a l c o sts co vere d by th e pla n . E stim ate s of fu tu re m ed ic al co sts ta k e acc o unt of an y su ch c o ntr ib uti o ns, b ase d o n t h e t e rm s o f t h e p la n a t t h e b ala n ce s h eet d ate ( o r b ase d o n a n y o bli g ati o n t h at g o es b ey o nd th ose te rm s). C han ges in th ose e m plo yee c o ntr ib utio ns re su lt in p ast s e rv ic e c o st o r, w here a p plic ab le , c u rta il m en ts . T he c o st o f m ee tin g c la im s m ay b e r e d uced b y b en efits f ro m s ta te o r o th er m ed ic a l p ro vid ers ( s e e p ara g ra p hs 8 3(c ) a n d 8 7). A ctu aria l G ain s a n d L oss e s 9 2. Actu aria l g ain s a n d lo ss e s s h ou ld b e r e co gn is e d im m ed ia te ly in th e s ta te m en t o f p ro fit a n d l o ss a s i n co m e o r e x p en se ( s e e p ara g ra ph 6 1). 9 3. Actu aria l g ain s a n d lo sse s m ay re su lt fro m in cre a se s o r d ecre a se s in e ith er th e p re se n t v alu e o f a d efin ed b en efit o blig ati o n o r th e fa ir v alu e o f an y re la te d p la n a sse ts . C au se s o f a ctu aria l g ain s a n d l o ss e s i n clu de, f o r e x am ple : ( a ) unex pecte d ly hig h or lo w ra te s of em plo yee tu rn o ver, ea rly re ti r e m en t or m orta li ty o r o f in cre a se s in s a la rie s, b en efits (if th e te rm s o f a p la n p ro vid e fo r i n fla tio nary b en efit i n cre a se s) o r m ed ic a l c o sts ; ( b ) th e e ffe ct o f c h an ges i n e sti m ate s o f f u tu re e m plo yee t u rn over, e arly r e ti r e m en t o r m orta li ty o r o f in cre a se s in s a la rie s, b en efits (if th e te rm s o f a p la n p ro vid e fo r i n fla tio nary b en efit i n cre a se s) o r m ed ic a l c o sts ; ( c ) th e e ffe ct o f c h an ges i n t h e d is c o unt r a te ; a n d ( d ) dif fe re n ce s b etw ee n th e a ctu al re tu rn o n p la n a sse ts a n d th e e x pecte d re tu rn o n p la n a sse ts ( s e e p ara g ra p h s 1 07-1 09). 31 P ast S erv ic e C ost 9 4. In m ea su rin g it s d efin ed b en efit lia bilit y u n der p ara gra ph 5 5, a n e n te rp ris e sh ou ld r e co gn is e p ast s e rv ic e c o st a s a n e x pen se o n a s tr a ig h t- li n e b a sis o ve r th e a ve ra ge p erio d u nti l t h e b en efits b eco m e v este d . T o th e e x te n t th at th e b en efits a re a lr e a dy v e ste d im m ed ia te ly f o llo w in g th e in tr o du ctio n o f, o r ch an ges to , a d efin ed b en efit p la n , a n en te rp ris e sh ou ld r e co gn is e p ast s e rv ic e c o st i m m ed ia te ly . 9 5. Past s e rv ic e c o st a ris e s w hen a n e n te rp ris e in tr o duces a d efin ed b en efit p la n o r c h an ges t h e b en efits p ay ab le u n der an ex is tin g d efin ed b en efit p la n . S uch ch an ges are in re tu rn fo r e m plo yee s e rv ic e o ver th e p erio d u nti l t h e b en efits c o ncern ed a re v este d . T here fo re , p ast s e rv ic e c o st i s r e c o gn is e d o ver th at p erio d, r e g ard le ss o f th e f a c t t h at th e c o st r e fe rs to e m plo yee s e rv ic e i n p re v io us p erio ds. P ast s e rv ic e c o st i s m ea su re d a s t h e c h an ge i n t h e l ia b il ity r e su ltin g f ro m t h e a m en dm en t ( s e e p ara g ra p h 6 5). E xam ple I llu str a tin g P ara gra p h 9 5 A n e n te rp ris e o p era te s a p en sio n p la n th at p ro vid es a p en sio n o f 2 % o f f in al s a la ry fo r e a ch y ea r o f s e rv ic e. T he b ene fit s b ec o m e v este d a fte r f iv e y ea rs o f s e rv ic e. O n 1 Ja n uary 2 0X 5 th e e n te rp ris e im pro ves th e p en sio n to 2 .5 % o f fin al s a la ry fo r e a ch year o f s e rv ic e s ta rtin g fro m 1 J a n uary 2 0X 1. A t th e d ate o f th e im pro vem en t, th e p re se n t v alu e o f t h e a d diti o nal b en efits f o r s e rv ic e f ro m 1 J a n uary 2 0X 1 t o 1 J a n u ary 2 0 X 5 i s a s f o llo w s: E m plo yees w ith m ore t h an f iv e y ears ’ s e rv ic e a t 1 /1 /X 5 Rs. 1 50 E m plo yees w ith l e ss t h an f iv e y ears ’ s e rv ic e a t 1 /1 /X 5 ( a v era g e p erio d u nti l v esti n g: t h re e y ea rs ) Rs. 1 20 Rs. 2 70 T he e n terp ris e r e co gnis e s R s. 1 50 im m ed ia te ly b eca use th ose b en efi ts a re a lr e a dy v este d . T he e n te rp ris e r e co gnis e s R s. 1 2 0 o n a s tr a ig ht-li n e b asis o ver th re e y e a rs fr o m 1 J a nuary 2 0X 5. 96. Past s e rv ic e c o st e x clu des: ( a ) th e e ffe c t o f d if fe re n ce s b etw ee n a c tu al a n d p re v io usly a ss u m ed s a la ry in cre ase s o n t h e o b lig ati o n t o p ay b en efit s f o r s e rv ic e i n p rio r y ears ( th ere i s n o p ast s e rv ic e c o st b eca u se a ctu aria l a ssu m ptio ns a ll o w f o r p ro je cte d s a la rie s); ( b ) under a n d o ver e stim ate s o f d is c re tio nary p en sio n in cre ase s w here a n e n te rp ris e h as a n o bli g ati o n to g ra n t su ch in cre ase s (th ere is n o p ast s e rv ic e c o st b eca u se a ctu aria l a ssu m ptio ns a ll o w f o r s u ch i n cre ase s); ( c ) estim ate s of ben efit im pro vem en ts th at re su lt fro m actu aria l gain s th at hav e a lr e ad y b ee n r e c o gn is e d in th e f in an cia l s ta te m en ts i f t h e e n te rp ris e is o b lig ed , b y e it h er th e f o rm al te rm s o f a p la n ( o r a n o bli g ati o n th at g o es b ey o nd th ose te rm s) o r le g is la tio n, to u se a n y s u rp lu s in th e p la n fo r th e b en efit o f p la n p artic ip an ts , e v en if th e b en efit in cre ase h as n ot y et b een fo rm ally aw ard ed (th e re su lti n g i n cre ase in th e obli g ati o n is an actu aria l lo ss an d not past se rv ic e co st, se e p ara g ra p h 8 5(b )); ( d ) th e i n cre ase i n v este d b en efits ( n ot o n a cco un t o f n ew o r i m pro ved b en efits ) w hen e m plo yee s c o m ple te v esti n g re q uir e m en ts (th ere is n o p ast s e rv ic e c o st b eca u se 32 th e e sti m ate d c o st o f b en efits w as r e c o gn is e d a s c u rre n t s e rv ic e c o st a s t h e s e rv ic e w as r e n dere d ); a n d ( e ) th e effe c t of pla n am en dm en ts th at re d uce ben efit s fo r fu tu re se rv ic e (a c u rta il m en t) . 9 7. An e n te rp ris e e sta b li s h es t h e a m ortis a tio n s c h ed ule f o r p ast s e rv ic e c o st w hen t h e b en efits a re in tr o duced o r c h an ged . I t w ould b e im pra ctic a b le to m ain ta in th e d eta ile d r e c o rd s n ee d ed to i d en tif y a n d i m ple m en t s u bse q u en t c h an ges i n t h at a m ortis a tio n s c h ed ule . M ore o ver, t h e e ffe ct i s l ik ely to b e m ate ria l o nly w here th ere is a c u rta il m en t o r s e ttl e m en t. T here fo re , a n e n te rp ris e a m en ds t h e a m ortis a tio n s c h ed ule f o r p ast s e rv ic e c o st o nly i f t h ere i s a c u rta ilm en t o r s e ttl e m en t. 9 8. Where a n e n te rp ris e r e d uce s b en efits p ay ab le u nder a n e x is tin g d efin ed b en efit p la n , th e r e su lt in g re d u cti o n in th e d efin ed b en efit lia b ili ty is re c o gn is e d a s (n eg ativ e) p ast s e rv ic e c o st o ver t h e a v era g e p erio d u ntil t h e r e d uce d p ortio n o f t h e b en efit s b ec o m es v este d . 9 9. Where a n e n te rp ris e re d uce s c erta in b en efit s p ay ab le u nder a n e x is tin g d efin ed b en efit p la n an d, at th e sa m e ti m e, in cre a se s oth er ben efits pay ab le under th e pla n fo r th e sa m e e m plo yee s, t h e e n te rp ris e t r e a ts t h e c h an ge a s a s in gle n et c h an ge. R eco g n it io n a n d M ea su rem en t: P la n A sse ts F air V alu e o f P la n A sse ts 1 00. The f a ir v alu e o f a n y p la n a ss e ts i s d ed ucte d in d ete rm in in g t h e a m ount r e co gn is e d i n t h e b ala n ce s h ee t u nder p ara g ra p h 5 5. W hen n o m ark et p ric e i s a v aila b le , t h e f a ir v alu e o f p la n a sse ts i s e stim ate d ; fo r e x am ple , b y d is c o untin g e x pec te d f u tu re c ash f lo w s u sin g a d is c o unt ra te th at r e fle cts b oth t h e r is k a sso cia te d w ith t h e p la n a sse ts a n d t h e m atu rit y o r e x pecte d d is p osa l d ate o f t h ose a ss e ts ( o r, if th ey h av e n o m atu rity , th e e x pec te d p erio d u nti l th e s e ttl e m en t o f th e r e la te d o blig ati o n). 1 01. Pla n a sse ts e x clu de u npaid c o ntr ib uti o ns d ue f ro m th e r e p orti n g e n te rp ris e to t h e f u nd, a s w ell a s a n y n on-tr a n sfe ra b le f in an cia l in str u m en ts is su ed b y th e e n te rp ris e a n d h eld b y th e f u nd . P la n a ss e ts a re r e d uced b y a n y li a b ilit ie s o f th e f u nd th at d o n ot r e la te to e m plo yee b en efits , f o r e x am ple , t r a d e a n d o th er p ay ab le s a n d l ia b ili tie s r e su ltin g f ro m d eriv ativ e f in an cia l i n str u m en ts . 1 02. Where p la n a sse ts in clu de q ualif y in g in su ra n ce p oli c ie s th at e x ac tly m atc h th e a m ount a n d t im in g o f s o m e o r a ll o f t h e b en efits p ay ab le u nder t h e p la n , t h e f a ir v alu e o f t h ose i n su ra n ce p olic ie s i s d eem ed t o b e t h e p re se n t v alu e o f t h e r e la te d o bli g atio ns, a s d esc rib ed i n p ara g ra p h 5 5 ( s u bje c t to a n y r e d ucti o n r e q uir e d if th e a m ounts r e ceiv ab le u n der th e in su ra n ce p olic ie s a re n ot r e co vera b le i n f u ll ) . R eim burse m en ts 1 03. When , a n d o n ly w hen , it is v ir tu ally c erta in th at a n oth er p a rty w ill r e im bu rse s o m e o r a ll o f th e e x pen dit u re re q u ir e d to se tt le a d efin ed b en efit o bli g ati o n , a n en te rp ris e sh ou ld r e co gn is e its r ig h t to r e im bu rse m en t a s a s e p ara te a sse t. T he e n te rp ris e s h ou ld m ea su re th e a ss e t a t f a ir v a lu e. I n a ll o th er r e sp ec ts , a n e n te rp ris e s h ou ld tr e a t th at a sse t in th e s a m e w ay a s p la n a sse ts . In th e s ta te m en t o f p ro fit a n d lo ss , th e e x pen se r e la ti n g to a d efin ed b en efit p la n m ay b e p re se n te d n et o f t h e a m ou n t r e co gn is e d f o r a r e im bu rse m en t. 33 1 04. Som etim es, a n e n te rp ris e is a b le to lo ok to a n oth er p arty , s u ch a s a n in su re r, to p ay p art o r a ll o f th e e x pen ditu re re q uir e d to se ttle a d efin ed b en efit o bli g ati o n. Q ualif y in g in su ra n ce p olic ie s, as defin ed in para g ra p h 7, are pla n asse ts . A n en te rp ris e acco unts fo r qualif y in g i n su ra n ce p o lic ie s in th e s a m e w ay a s f o r a ll o th er p la n a ss e ts a n d p ara g ra p h 1 03 d oes n ot a p p ly ( s e e p ara g ra p hs 4 0-4 3 a n d 1 02). 1 05. When a n in su ra n ce p oli c y is n ot a q ualif y in g in su ra n ce p olic y , th at in su ra n ce p o lic y is n ot a p la n a sse t. P ara g ra p h 1 03 d eals w ith su ch c ase s: th e e n te rp ris e re co gnis e s its rig h t to r e im burs e m en t u nder th e in su ra n ce p olic y as a se p ara te a ss e t, ra th er th an as a d ed uctio n in d ete rm in in g th e d efin ed b en efit li a b il ity re co gn is e d u nder p ara g ra p h 5 5 ; in a ll o th er re sp ects , i n clu din g fo r d ete rm in atio n o f th e f a ir v alu e, th e e n te rp ris e tr e a ts th at a ss e t in th e s a m e w ay a s p la n a ss e ts . P ara g ra p h 119120(cf)(viii) re q uir e s th e e n te rp ris e to d is c lo se a b rie f d esc rip ti o n o f th e l i n k b etw ee n t h e r e im burs e m en t r ig h t a n d t h e r e la te d o bli g ati o n. E xam ple I llu str a tin g P ara gra p hs 1 03-1 05 (A m ount i n R s.) L ia b ilit y r e co gn is e d i n b ala n ce s h ee t b ein g t h e p re se n t v alu e o f o blig atio n 1,2 58 R ig h ts u nder i n su ra n ce p olic ie s t h at e x ac tly m atc h t h e a m ount a n d t i m in g o f s o m e o f t h e b en efit s p ay ab le u n der t h e p la n . T hose b en efits h av e a p re se n t v alu e o f R s. 1 ,0 92 1,0 92 106. If th e rig h t to re im burs e m en t a ris e s u n der a n in su ra n ce p oli c y th at e x ac tly m atc h es th e a m ou nt a n d tim in g o f s o m e o r a ll o f th e b en efit s p ay ab le u nder a d efin ed b en efit p la n , th e f a ir v alu e o f th e r e im burs e m en t r ig h t is d eem ed to b e th e p re se n t v alu e o f th e r e la te d o bli g atio n, a s d esc rib ed in para g ra p h 55 (s u bje c t to an y re d uctio n re q uir e d if th e re im burs e m en t is not r e co vera b le i n f u ll ) . R etu rn o n P la n A ss e ts 1 07. The e x pec te d r e tu rn o n p la n a sse ts is a c o m pon en t o f th e e x p en se r e co gn is e d in th e s ta te m en t o f p ro fit a n d l o ss . T he d if fe re n ce b etw ee n t h e e x pec te d r e tu rn o n p la n a ss e ts a n d t h e a ctu al r e tu rn o n p la n a sse ts i s a n a ctu aria l g ain o r l o ss. 1 08. The e x p ecte d re tu rn o n p la n a sse ts is b ase d o n m ark et e x pecta ti o ns, a t th e b eg in n in g o f t h e p erio d , f o r re tu rn s o ver th e e n ti r e lif e o f th e r e la te d o blig atio n. T he e x pecte d r e tu rn o n p la n a sse ts r e fle c ts c h an ges in t h e f a ir v alu e o f p la n a ss e ts h eld d urin g t h e p erio d a s a r e su lt o f a c tu al c o ntr ib uti o ns p aid i n to t h e f u nd a n d a ctu al b en efit s p aid o ut o f t h e f u nd . 1 09. In dete rm in in g th e ex p ecte d an d ac tu al re tu rn on pla n ass e ts , an en te rp ris e d ed ucts e x pec te d a d m in is tr a tio n c o sts , o th er th an th ose in clu ded in th e a ctu aria l a ssu m ptio ns u se d to m ea su re t h e o bli g atio n. 34 E xam ple I llu str a tin g P ara gra p h 1 08 A t 1 J a n uary 2 0X 1, th e f a ir v alu e o f p la n a s s e ts w as R s. 1 0,0 0 0. O n 3 0 J u ne 2 0X 1, t h e p la n p aid b en efits o f R s. 1 ,9 00 a n d re c eiv ed c o ntr ib utio ns o f R s. 4 ,9 00. A t 3 1 D ecem ber 2 0X 1, th e f a ir v alu e o f p la n a ss e ts w as R s. 1 5,0 00 a n d th e p re se n t v alu e o f th e d efin ed b en efit o bli g atio n w as R s. 1 4,7 92. A ctu aria l lo ss e s o n th e o bli g atio n fo r 2 0X 1 w ere R s. 6 0. A t 1 J a n uary 2 0X 1, th e r e p ortin g e n te rp ris e m ad e th e f o llo w in g e sti m ate s, b ase d o n m ark et p ric es a t t h at d ate : % In te re st a n d d iv id en d i n co m e, a fte r t a x p ay ab le b y t h e f u nd 9.2 5 R ea lis e d a n d u n re alis e d g ain s o n p la n a sse ts ( a fte r t a x ) 2.0 0 A dm in is tr a tio n c o sts (1 .0 0) E xpecte d r a te o f r e tu rn 10.2 5 F or 2 0X 1, t h e e xp ec te d a nd a ctu al r e tu rn o n p la n a ss e ts a re a s f o llo w s: (A m ount i n R s.) R etu rn o n R s. 1 0,0 00 h eld f o r 1 2 m onth s a t 1 0.2 5% 1,0 25 R etu rn o n R s. 3 ,0 00 h eld f o r s ix m onth s a t 5 % ( e q uiv a le n t t o 1 0.2 5% a nnua lly , c o m pounded e ve ry s ix m onth s) 15 0 E xp ecte d r e tu rn o n p la n a ss e ts f o r 2 0X 1 1,1 75 F air v a lu e o f p la n a sse ts a t 3 1 D ec em ber 2 0X 1 15 ,0 00 L ess f a ir v a lu e o f p la n a sse ts a t 1 J a nuary 2 0X 1 (1 0,0 00) L ess c o n tr ib utio ns r e c eiv ed (4 ,9 00) A dd b en efi ts p aid 1,9 00 A ctu al r e tu rn o n p la n a sse ts 2,0 00 T he d iff e re n ce b etw ee n th e e x p ecte d r e tu rn o n p la n a sse ts ( R s. 1 ,1 75) a nd t h e a ctu al r e tu rn o n p la n a ss e ts ( R s. 2 ,0 00 ) i s a n a ctu aria l g a in o f R s. 8 2 5. T here fo re , t h e n et a ctu aria l g ain o f R s. 7 65 ( R s. 8 25 – R s. 6 0 ( a ctu aria l lo ss o n th e o blig a ti o n)) w ould b e r e c o gn is e d in th e sta te m en t o f p ro fit a nd l o ss. T he e xp ecte d r e tu rn o n p la n a sse ts f o r 2 0 X 2 w il l b e b ase d o n m ark e t e xp ec ta ti o ns a t 1 /1 /X 2 fo r r e tu rn s o ver t h e e n ti r e l i fe o f t h e o bli g atio n. C urta ilm en ts a n d S ett le m en ts 1 10. An e n te rp ris e s h ou ld r e co gn is e g ain s o r lo ss e s o n th e c u rta ilm en t o r s e ttl e m en t o f a d efin ed ben efit pla n w hen th e cu rta il m en t or se tt le m en t occu rs. T he ga in or lo ss on a c u rta il m en t o r s e ttl e m en t s h ou ld c o m pris e : ( a ) an y r e su lt in g c h an ge i n t h e p re se n t v a lu e o f t h e d efin ed b en efit o blig atio n ; ( b ) an y r e su lt in g c h an ge i n t h e f a ir v a lu e o f t h e p la n a sse ts ; ( c ) an y r e la te d p ast s e rv ic e c o st th at, u nder p ara gra ph 9 4, h ad n ot p re vio u sly b een r e co gn is e d . 35 1 11. Befo re d ete rm in in g th e effe ct o f a cu rta ilm en t o r se ttl e m en t, a n en te rp ris e sh ou ld r e m ea su re th e oblig atio n (a n d th e re la te d pla n asse ts , if an y) usin g cu rre n t actu aria l a ss u m ptio n s ( in clu din g c u rre n t m ark et i n te re st r a te s a n d o th er c u rre n t m ark et p ric es). 1 12. A c u rta ilm en t o ccu rs w hen a n e n te rp ris e e ith er: ( a ) has a p re se n t o bli g atio n, a ris in g fro m th e re q uir e m en t o f a sta tu te /r e g u la to r o r o th erw is e , to m ak e a m ate ria l r e d ucti o n i n t h e n um ber o f e m plo yees c o vere d b y a p la n ; o r ( b ) am en ds th e te rm s o f a d efin ed b en efit p la n s u ch th at a m ate ria l e le m en t o f f u tu re s e rv ic e b y c u rre n t e m plo yee s w il l n o lo nger q ualif y fo r b en efits , o r w ill q ualif y o nly f o r r e d uce d b en efits . A cu rta ilm en t m ay aris e fro m an is o la te d ev en t, su ch as th e clo sin g of a pla n t, d is c o ntin uan ce o f an o pera ti o n o r te rm in atio n o r su sp en sio n o f a p la n . A n ev en t is m ate ria l e n ough t o q uali f y a s a c u rta ilm en t i f t h e r e c o gn it io n o f a c u rta ilm en t g ain o r l o ss w ould h av e a m ate ria l e ffe ct o n th e fin an cia l s ta te m en ts . C urta ilm en ts a re o fte n lin k ed w it h a r e str u ctu rin g. T here fo re , a n e n te rp ris e a cc o unts f o r a c u rta ilm en t a t th e s a m e t im e a s f o r a r e la te d r e str u ctu rin g. 1 13. A s e ttl e m en t o cc u rs w hen a n e n te rp ris e e n te rs i n to a t r a n sa c tio n t h at e lim in ate s a ll f u rth er o blig ati o ns fo r p art o r a ll o f th e b en efit s p ro vid ed u nder a d efin ed b en efit p la n , fo r e x am ple , w hen a lu m p-s u m c ash p ay m en t is m ad e to , o r o n b eh alf o f, p la n p artic ip an ts in e x ch an ge fo r t h eir r ig h ts t o r e ce iv e s p ec if ie d p ost- e m plo ym en t b en efits . 1 14. In so m e c ase s, a n e n te rp ris e a cq uir e s a n in su ra n ce p oli c y to fu nd so m e o r a ll o f th e e m plo yee b en efit s r e la tin g to e m plo yee s e rv ic e in th e c u rre n t a n d p rio r p erio ds. T he a c q u is iti o n o f s u ch a p olic y is n ot a s e ttle m en t if th e e n te rp ris e r e ta in s a n o blig ati o n (s e e p ara g ra p h 4 0) to p ay f u rth er a m ounts if th e in su re r d oes n o t p ay th e e m plo yee b en efits s p ecif ie d in th e in su ra n ce p olic y . P ara g ra p hs 1 03-1 0 6 d ea l w ith th e r e co gn iti o n a n d m easu re m en t o f r e im bu rs e m en t r ig h ts u nder i n su ra n ce p oli c ie s t h at a re n ot p la n a sse ts . 1 15. A se ttle m en t o ccu rs to geth er w it h a cu rta il m en t if a p la n is te rm in ate d su ch th at th e o blig ati o n is s e ttl e d a n d th e p la n c ease s to e x is t. H ow ev er, th e te rm in ati o n o f a p la n is n o t a c u rta il m en t o r s e tt le m en t if th e p la n is re p la ced b y a n ew p la n th at o ffe rs b en efit s th at a re , in s u bsta n ce , i d en tic al. 1 16. Where a c u rta ilm en t r e la te s to o nly s o m e o f th e e m plo yee s c o vere d b y a p la n , o r w here o nly p art o f an o blig ati o n is se ttl e d , th e g ain o r lo ss in clu des a p ro p ortio n ate sh are o f th e p re v io usly u nre co gn is e d p ast s e rv ic e c o st. T he p ro porti o nate s h are is d ete rm in ed o n th e b asis o f t h e p re se n t v alu e o f th e o bli g atio ns b efo re a n d a fte r t h e c u rta il m en t o r s e tt le m en t, u nle ss a n oth er b asis i s m ore r a ti o nal i n t h e c ir c u m sta n ce s. 36 E xam ple I llu str a tin g P ara gra p h 1 16 A n en te rp ris e dis c o ntin ues a busin ess se g m en t an d em plo yee s of th e d is c o n tin ued se g m en t w il l earn n o fu rth er b en efits . T his is a cu rta il m en t w ith o ut a s e ttl e m en t. U sin g c u rre n t a ctu aria l a ssu m ptio ns ( in clu din g c u rr e n t m ark et in te re st r a te s a n d o th er c u rre n t m ark et p ric es) i m m ed ia te ly b efo re t h e cu rta il m en t, t h e e n te rp ris e h as a d efin ed b en efit o blig atio n w ith a n et p re se n t v alu e of R s. 1,0 00 an d pla n asse ts w ith a fa ir valu e of R s. 820 an d unre c o gn is e d p ast se rv ic e c o st o f R s. 5 0 . T he c u rta ilm en t re d uces th e n et p re se n t v alu e o f t h e o b lig ati o n b y R s. 1 00 t o R s. 9 00. O f th e p re v io usly u nre c o gnis e d p ast se rv ic e c o st, 1 0% (R s. 1 00/R s. 1 00 0) r e la te s to th e part of th e oblig atio n th at w as eli m in ate d th ro u gh th e cu rta ilm en t. T here fo re , t h e e ffe ct o f t h e c u rta il m en t i s a s f o llo w s: ( A m ount i n R s.) Befo re Curta ilm en t Aft e r Curta il m en t gain cu rta il m en t N et p re se n t v a lu e o f o blig atio n 1,0 00 (1 00) 90 0 F air v a lu e o f p la n a sse ts (8 20) - (8 20) 18 0 (1 00) 80 U nre co gnis e d p ast s e rv ic e c o st (5 0) 5 (4 5) N et l ia bil it y r e co gnis e d i n b ala n ce s h eet 13 0 (9 5) 35 P rese n ta tio n O ffs e t 1 17. An e n te rp ris e s h ou ld o ffs e t a n a ss e t r e la tin g to o n e p la n a gain st a lia bilit y r e la ti n g to a n oth er p la n w hen , a n d o n ly w hen , t h e e n te rp ris e : ( a ) has a le g ally e n fo rc e a ble r ig h t to u se a s u rp lu s in o n e p la n to s e tt le o bli g atio n s u n der t h e o th er p la n ; a n d ( b ) in te n ds e it h er to s e ttl e th e o blig atio n s o n a n et b asis , o r t o r e a li s e t h e s u rp lu s in o n e p la n a n d s e tt le i t s o bli g ati o n u nder t h e o th er p la n s im ulta n eo u sly . F in an cia l C om pon en ts o f P ost-e m plo ym en t B en efit C osts 1 18. This S ta te m en t d oes n ot s p ec if y w heth er a n e n te rp ris e s h ould p re se n t c u rre n t s e rv ic e c o st, i n te re st c o st a n d th e e x pec te d r e tu rn o n p la n a sse ts a s c o m ponen ts o f a s in gle ite m o f in co m e o r e x pen se o n t h e f a ce o f t h e s ta te m en t o f p ro fit a n d l o ss . D is c lo su re 119. An e n te rp ris e s h ou ld d is c lo se i n fo rm atio n th at e n able s u se rs o f f in an cia l s ta te m en ts to eva lu ate th e n atu re o f it s d efin ed b en efit p la n s a n d th e fin an cia l e ffe cts o f c h an ges in th ose p la n s d u rin g t h e p erio d. 37 1 19120. An e n te rp ris e s h ou ld d is c lo se th e fo llo w in g in fo rm atio n a bou t d efin ed b en efit p la n s: (a ) th e e n te rp ris e ’s a cc o u ntin g p olic y f o r r e c o gn is in g a ctu aria l g ain s a n d l o ss e s .; (b ) a g en era l d esc rip tio n o f t h e t y p e o f p la n.; (c ) a re c o n cil ia ti o n o f o pen in g a n d c lo sin g b ala n ces o f th e p re se n t v a lu e o f th e d efin ed b en efit o bli g ati o n s h ow in g s e p ara te ly , if a ppli c a ble , th e e ffe cts d u rin g th e p erio d a tt r ib u ta ble t o e a ch o f t h e f o llo w in g: (i) cu rre n t s e rv ic e c o st, ( ii) in te re st c o st, ( iii ) co n tr ib u tio n s b y p la n p a rtic ip an ts , (iv ) actu aria l g ain s a n d l o sse s, (v ) fo re ig n cu rre n cy ex ch an ge ra te ch an ges on pla n s m ea su re d in a cu rre n cy d if fe re n t f r o m t h e e n te rp ris e ’s r e p orti n g c u rre n cy , (v i) ben efits p aid , (v ii ) past s e rv ic e c o st, ( v ii i) am alg am atio n s, (ix ) cu rta ilm en ts , a n d (x ) se tt le m en ts . (d ) an a n aly sis o f th e d efin ed b en efit o bli g ati o n in to a m ou nts a ris in g fr o m p la n s th at a re w holl y u nfu nded a n d a m ou n ts a ris in g fr o m p la n s th at a re w holly o r p artly f u nded . (e ) a r e co n cilia tio n o f th e o pen in g a n d c lo sin g b a la n ce s o f th e fa ir v a lu e o f p la n ass e ts a n d o f th e o pen in g a n d c lo sin g b ala n ces o f a n y re im bu rs e m en t rig h t r e co gn is e d a s a n a ss e t i n a cc o rd a n ce w ith p ara gra p h 1 03 s h ow in g s e p ara te ly , i f a ppli c a ble , t h e e ffe cts d u rin g t h e p erio d a ttr ib u ta ble t o e a ch o f t h e f o llo w in g: (i) ex p ecte d r e tu rn o n p la n a sse ts , (ii) actu aria l g ain s a n d l o sse s, (iii ) fo re ig n cu rre n cy ex ch an ge ra te ch an ges on pla n s m ea su re d in a cu rre n cy d if fe re n t f r o m t h e e n te rp ris e ’s r e p orti n g c u rre n cy , (iv ) co n tr ib u tio n s b y t h e e m plo ye r, (v ) co n tr ib u tio n s b y p la n p a rtic ip an ts , (v i) ben efits p aid , (v ii ) am alg am atio n s, a n d (v ii i) se tt le m en ts . (cf) a r e co n cili a ti o n o f th e p re se n t v a lu e o f th e d efin ed b en efit o bli g atio n in ( c ) a n d th e f a ir v a lu e o f th e p la n a ss e ts in ( e ) to th e a sse ts a n d lia bili tie s r e co gn is e d in th e b ala n ce s h ee t, s h ow in g a t l e a st: 38 (i) th e p re se n t v a lu e a t th e b ala n ce s h ee t d a te o f d efin ed b en efit o bli g atio n s th at a re w holl y u n fu nded ; (ii) th e p re se n t v a lu e (b efo re d ed u ctin g th e fa ir v a lu e o f p la n a sse ts ) a t th e b ala n ce sh ee t date of defin ed ben efit obli g atio n s th at are w holl y or p artl y f u n ded ; (iii ) th e f a ir v a lu e o f a n y p la n a sse ts a t t h e b a la n ce s h eet d ate ; (iv) th e past se rv ic e co st not yet re c o gn is e d in th e bala n ce sh ee t (s e e p ara gra ph 9 4); ( vi i) an y am ou nt not re co gn is e d as an asse t, bec a u se of th e li m it in para gra ph 5 9(b ); ( v iiii) th e fa ir va lu e a t th e b ala n ce sh eet d ate o f a n y re im bu rs e m en t rig h t r e c o gn is e d a s a n a sse t u nder in a cco rd an ce w ith para gra ph 1 03 ( w ith a brie f d esc rip ti o n o f th e lin k b etw een th e re im bu rs e m en t rig h t a n d th e r e la te d o bli g ati o n ); a n d ( ivi i) th e o th er a m ou nts r e co gn is e d i n t h e b ala n ce s h eet.; (d ) th e a m ou nts i n clu ded i n t h e f a ir v a lu e o f p la n a sse ts f o r: (i) e a ch c a te g ory o f th e r e p orti n g e n te rp ris e ’s o w n fin an cia l in str u m en ts ; a n d (ii) a n y pro perty occu pie d by, or oth er asse ts use d by, th e re p ortin g en te rp ris e ; (e ) a r e c o n cil ia ti o n s h ow in g t h e m ovem en ts d u rin g t h e p erio d i n t h e n et l i a bili ty ( o r a ss e t) r e co gn is e d i n t h e b ala n ce s h ee t; (fg) th e to ta l e x pen se r e c o gn is e d in th e s ta te m en t o f p ro fit a n d lo ss f o r e a ch o f th e fo llo w in g, a n d th e lin e ite m (s ) o f th e s ta te m en t o f p ro fit a n d lo ss in w hic h th ey a re i n clu ded : ( i) cu rre n t s e rv ic e c o st; ( ii) in te re st c o st; ( iii ) ex p ecte d r e tu rn o n p la n a sse ts ; ( iv ) ex p ecte d re tu rn on an y re im bu rse m en t rig h t re co g n is e d as an asse t u nder in a cco rd an ce w it h para gra ph 1 0 3; (v ) actu aria l g ain s a n d l o sse s; ( v i) past s e rv ic e c o st; ( v ii ) th e e ffe ct o f a n y c u rta il m en t o r s e ttl e m en t; a n d ( v ii i) th e e ffe c t o f th e lim it in p ara gra ph 5 9 (b ), i.e ., th e e x te n t to w hic h th e a m ou n t d ete rm in ed in a cc o rd an ce w it h u nder p ara gra ph 5 5 ( if n eg ativ e) e x cee d s th e a m ou nt d ete rm in ed in a cc o rd an ce w ith un der p ara gra ph 5 9 (b ). ( h ) fo r e a ch m ajo r c a te g ory o f p la n a ss e ts , w hic h s h ou ld in clu de, b u t is n ot li m it e d to , eq u it y in str u m en ts , deb t in str u m en ts , pro perty , a n d a ll oth er asse ts , th e 39 p erc en ta ge o r a m ou nt th at e a ch m ajo r c a te g ory c o n stit u te s o f th e f a ir v a lu e o f th e t o ta l p la n a sse ts . (i) th e a m ou nts i n clu ded i n t h e f a ir v a lu e o f p la n a sse ts f o r: (i) ea ch c a te g o ry o f t h e e n te rp ris e ’s o w n f in an cia l i n str u m en ts ; a n d (ii) an y p ro perty o ccu pie d b y, o r o th er a sse ts u se d b y, t h e e n te rp ris e . (j) a n arr a tiv e d esc rip tio n o f th e b asis u se d to d ete rm in e th e o vera ll e x pecte d r a te o f r e tu rn o n a sse ts , i n clu din g t h e e ffe ct o f t h e m ajo r c a te g orie s o f p la n a ss e ts . (gk) th e actu al re tu rn on pla n asse ts , as well as th e actu al re tu rn on an y re im bu rse m en t rig h t re co gn is e d as an ass e t u nder in acco rd an ce with para gra ph 1 03.; a n d (hl) th e p rin cip al a ctu aria l a ssu m pti o n s u se d a s a t t h e b ala n ce s h ee t d ate , i n clu din g, w here a pplic a ble : ( i) th e d is c o u nt r a te s; ( ii) th e e x pecte d r a te s o f r e tu rn o n a n y p la n a sse ts f o r t h e p erio ds p re se n te d i n t h e f in an cia l s ta te m en ts ; ( iii ) th e e x pec te d ra te s o f re tu rn fo r th e p erio ds p re se n te d in th e fin an cia l s ta te m en ts on an y re im bu rse m en t rig h t re c o gn is e d as an asse t in acc o rd an ce w it h under p a ra gra ph 1 03; (iv ) th e e x pec te d ra te s o f sa la ry in cre a se s (a n d o f c h an ges in a n in dex o r o th er v a ria ble sp ec if ie d in th e te rm s o f a p la n a s th e b asis fo r fu tu re b en efit i n cre a se s); (iv ) med ic a l c o st t r e n d r a te s; a n d (vi) an y o th er m ate ria l a ctu aria l a ssu m ptio n s u se d . A n e n te rp ris e s h ou ld d is c lo se e a ch a ctu aria l a ssu m pti o n in a bso lu te te rm s ( fo r e x a m ple , as an abso lu te perc en ta ge) an d n ot ju st as a m arg in betw een dif fe re n t p erc en ta ges o r o th er v a ria ble s. Apart fr o m th e a bove a ctu aria l a ssu m ptio n s, a n e n te rp ris e sh ou ld in clu de a n asse rtio n u nder th e a ctu aria l a ssu m ptio n s to th e e ff e ct th at e stim ate s o f f u tu re s a la ry in cre a se s, co n sid ere d in actu aria l va lu atio n , ta ke acco u n t of in fla tio n , se n io rity , p ro m otio n a n d o th er r e le v a n t fa cto rs , s u ch a s s u pply a n d d em an d in th e e m plo ym en t m ark et. ( m ) th e e ffe c t o f a n in cre a se o f o n e p erc en ta ge p oin t a n d th e e ffe c t o f a d ecre a se o f o n e p erc en ta g e p oin t i n t h e a ss u m ed m ed ic a l c o st t r e n d r a te s o n : (i) th e a ggre g a te o f t h e c u rre n t s e rv ic e c o st a n d in te re st c o st c o m pon en ts o f n et p erio dic p ost- e m plo ym en t m ed ic a l c o sts ; a n d (ii) th e a ccu m ula te d p ost- e m plo ym en t b en efit o blig ati o n f o r m ed ic a l c o sts . For th e pu rp ose s of th is dis c lo su re , all oth er assu m pti o n s sh ou ld be h eld co n sta n t. F or p la n s o pera tin g in a h ig h in fla tio n e n vir o n m en t, th e d is c lo su re s h ou ld be th e e ffe ct o f a p erc en ta ge in cre a se o r d ecre a se in th e a ssu m ed m ed ic a l c o st tr e n d ra te o f a s ig n if ic a n ce s im ila r t o o n e p erc en ta ge p oin t i n a l o w i n fla tio n e n vir o n m en t. 40 (n ) th e a m ou nts f o r t h e c u rre n t a n n ual p erio d a n d p re vio u s f o u r a n nual p erio ds o f: (i) th e p re se n t v a lu e o f th e d efin ed b en efit o bli g ati o n , th e fa ir v a lu e o f th e p la n a sse ts a n d t h e s u rp lu s o r d efic it i n t h e p la n ; a n d (ii) th e e x perie n ce a dju stm en ts a ris in g o n : (A ) th e p la n lia bilit ie s ex pre sse d eit h er a s (1 ) a n a m ou n t o r (2 ) a perc en ta ge o f t h e p la n l ia bilit ie s a t t h e b ala n ce s h ee t d ate , a n d (B ) th e pla n asse ts ex pre sse d eit h er as (1 ) an am ou nt or (2 ) a perc en ta ge o f t h e p la n a sse ts a t t h e b ala n ce s h eet d ate . (o ) th e e m plo ye r’s b est e sti m ate , a s so on a s it c a n re a so n ably b e d ete rm in ed , o f c o n tr ib u ti o n s ex pecte d to be paid to th e pla n du rin g th e an nual perio d beg in nin g a fte r t h e b ala n ce s h eet d ate . 1 20121. Para g ra p h 119120(b ) re q uir e s a g en era l d esc rip tio n o f th e ty p e o f p la n . S uch a d esc rip tio n d is ti n gu is h es, f o r e x am ple , f la t s a la ry p en sio n p la n s f ro m f in al s a la ry p en sio n p la n s a n d fro m p ost- e m plo ym en t m ed ic a l p la n s. T he d esc rip tio n o f th e p la n s h ould in clu de in fo rm al p ra ctic es th at g iv e ris e to o th er o bli g atio ns in clu ded in th e m easu re m en t o f th e d efin ed b en efit o blig ati o n i n a cc o rd an ce w ith p ara g ra p h 5 3. F urth er d eta il i s n ot r e q uir e d . 1 21122. When a n e n te rp ris e h as m ore th an o ne d efin ed b en efit p la n , d is c lo su re s m ay b e m ad e in to ta l, s e p ara te ly fo r e a ch p la n , o r in s u ch g ro up in gs a s a re c o nsid ere d to b e th e m ost u se fu l. I t m ay b e u se fu l t o d is ti n gu is h g ro upin gs b y c rite ria s u ch a s t h e f o ll o w in g: ( a ) th e g eo gra p hic a l lo cati o n o f th e p la n s, fo r e x am ple , b y d is tin guis h in g d o m esti c p la n s f ro m f o re ig n p la n s; o r ( b ) wheth er pla n s are su bje ct to m ate ria ll y dif fe re n t ris k s, fo r ex am ple , by d is tin gu is h in g f la t s a la ry p en sio n p la n s f ro m f in al s a la ry p en sio n p la n s a n d f ro m p ost- e m plo ym en t m ed ic al p la n s. W hen a n e n te rp ris e p ro vid es d is c lo su re s i n t o ta l f o r a g ro upin g o f p la n s, s u ch d is c lo su re s a re p ro vid ed i n t h e f o rm o f w eig h te d a v era g es o r o f r e la tiv ely n arro w r a n ges. 1 22123. Para g ra p h 3 0 r e q uir e s a d ditio nal d is c lo su re s a b out m ulti - e m plo yer d efin ed b en efit p la n s t h at a re t r e ate d a s i f t h ey w ere d efin ed c o ntr ib uti o n p la n s. 1 23124. Where re q uir e d by A S 18 R ela te d P arty D is c lo su re s an en te rp ris e dis c lo se s in fo rm ati o n a b out: ( a ) re la te d p arty t r a n sa cti o ns w it h p o st- e m plo ym en t b en efit p la n s; a n d ( b ) post- e m plo ym en t b en efit s f o r k ey m an ag em en t p ers o nnel. 1 24125. Where re q uir e d by A S 29 P ro vis io ns, C onti n gen t L ia bil iti e s and C ontin gen t A sse ts an en te rp ris e dis c lo se s in fo rm atio n ab out co ntin gen t li a b il iti e s aris in g fro m post- e m plo ym en t b en efit o blig atio ns. I llu str a tiv e D is c lo su res 1 25126. Appen dix B c o nta in s i ll u str a tiv e d is c lo su re s. 41 O th er L on g-te rm E m plo yee B en efit s 126127. Oth er l o ng-te rm e m plo yee b en efit s i n clu de, f o r e x am ple : ( a ) lo ng-te rm c o m pen sa te d a b se n ces s u ch a s l o ng-s e rv ic e o r s a b batic a l l e a v e; ( b ) ju bil e e o r o th er l o ng-s e rv ic e b en efit s ; ( c ) lo ng-te rm d is a b ili ty b en efit s ; ( d ) pro fit - s h arin g a n d b onuse s p ay ab le tw elv e m onth s o r m ore a fte r th e e n d o f th e p erio d i n w hic h t h e e m plo yees r e n der t h e r e la te d s e rv ic e; a n d ( e ) defe rr e d c o m pen sa ti o n p aid tw elv e m onth s o r m ore a fte r th e e n d o f th e p erio d in w hic h i t i s e arn ed . 1 27128. In c a se o f o th er lo ng-te rm e m plo yee b en efits , th e in tr o ductio n o f, o r c h an ges to , o th er lo ng-te rm e m plo yee b en efits r a re ly c a u se s a m ate ria l a m ount o f p ast s e rv ic e c o st. F or th is r e aso n, th is S ta te m en t r e q uir e s a s im plif ie d m eth od o f a cco un tin g f o r o th er lo ng-te rm e m plo yee b en efits . T his m eth od d if fe rs f ro m th e a c co untin g r e q uir e d f o r p ost- e m plo ym en t b en efits i n so fa r a s t h at a ll p ast s e rv ic e c o st i s r e co gn is e d i m m ed ia te ly . R eco g n it io n a n d M ea su rem en t 1 28129. The a m ou nt re c o gn is e d a s a li a bili ty fo r o th er lo n g-te rm em plo yee b en efits sh ou ld b e t h e n et t o ta l o f t h e f o ll o w in g a m ou nts : ( a ) th e p re se n t v a lu e o f t h e d efin ed b en efit o blig atio n a t th e b ala n ce s h eet d a te ( s e e p ara gra ph 6 5); ( b ) min us th e fa ir v a lu e a t th e b ala n ce sh ee t d ate o f p la n a ss e ts (if a n y) o u t o f w hic h t h e o blig atio n s a re t o b e s e ttle d d ir e ctly ( s e e p ara gra ph s 1 00-1 0 2). I n m ea su rin g th e lia bilit y , a n e n te rp ris e sh ou ld a pply p ara gra ph s 4 9-9 1, ex clu din g p ara gra ph s 5 5 a n d 6 1. A n e n te rp ris e s h ou ld a pply p ara gra ph 1 03 in r e c o gn is in g a n d m ea su rin g a n y r e im bu rse m en t r ig h t. 1 29130. For o th er lo n g-te rm e m plo yee b en efit s , a n e n te rp ris e s h ou ld r e co g n is e th e n et to ta l o f th e fo ll o w in g a m ou n ts a s e x pen se o r (s u bje c t to p ara gra ph 5 9) in co m e, e x cep t to th e e x te n t th at a n oth er A cco u nti n g S ta n dard r e q u ir e s o r p erm its th eir in clu sio n in th e c o st o f a n a ss e t: (a ) cu rr e n t s e rv ic e c o st ( s e e p ara gra ph s 6 4-9 1); ( b ) in te re st c o st ( s e e p a ra gra ph 8 2); ( c ) th e e x pecte d re tu rn o n a n y p la n a sse ts (s e e p ara gra ph s 1 07-1 09 ) a n d o n a n y r e im bu rse m en t r ig h t r e c o gn is e d a s a n a ss e t ( s e e p ara g ra ph 1 03); ( d ) actu aria l g ain s a n d l o sse s, w hic h s h ou ld a ll b e r e c o gn is e d i m m ed ia te ly ; ( e ) past s e rv ic e c o st, w hic h s h ou ld a ll b e r e co gn is e d i m med ia te ly ; a n d ( f) th e e ffe ct o f a n y c u rta ilm en ts o r s e tt le m en ts ( s e e p ara gra ph s 1 10 a n d 1 11). 1 30131. One fo rm o f o th er lo ng-te rm e m plo yee b en efit is lo ng-te rm d is a b il it y b en efit. If th e le v el o f b en efit d ep en ds o n th e le n gth o f s e rv ic e , a n o blig atio n a ris e s w hen th e s e rv ic e is 42 re n dere d . M easu re m en t o f th at o blig atio n re fle cts th e p ro bab ilit y th at p ay m en t w il l b e re q uir e d a n d th e le n gth o f tim e fo r w hic h p ay m en t is e x pecte d to b e m ad e. If th e le v el o f b en efit is th e s a m e fo r an y d is a b le d em plo yee re g ard le ss o f yea rs o f se rv ic e, th e ex p ecte d co st o f th ose b en efits i s r e co gn is e d w hen a n e v en t o ccu rs t h at c a u se s a l o ng-te rm d is a b ili ty . D is c lo su re 131132. Alth ough th is S ta te m en t d oes n ot re q uir e sp ecif ic d is c lo su re s a b out o th er lo ng- te rm em plo yee ben efit s , oth er A cc o unti n g S ta n dard s m ay re q uir e dis c lo su re s, fo r ex am ple , w here th e ex pen se re su lti n g fro m su ch b en efits is o f su ch siz e, n atu re o r in cid en ce th at its d is c lo su re is re le v an t to e x pla in th e p erf o rm an ce o f th e e n te rp ris e f o r th e p erio d (s e e A S 5 N et P ro fi t o r L oss fo r th e P erio d, P rio r P erio d Ite m s a nd C hanges in A cc o unti n g P olic ie s). W here re q uir e d b y A S 1 8 R ela te d P arty D is c lo su re s a n e n te rp ris e d is c lo se s in fo rm ati o n a b out o th er l o ng-te rm e m plo yee b en efit s f o r k ey m an ag em en t p ers o nnel. T erm in atio n B en efit s 132133. This S ta te m en t d ea ls w ith te rm in ati o n b en efits se p ara te ly fro m o th er e m plo yee b en efits b ecau se th e ev en t w hic h giv es ris e to an o bli g ati o n is th e te rm in atio n ra th er th an e m plo yee s e rv ic e . R eco g n it io n 133134. An en te rp ris e sh ou ld re c o gn is e te rm in atio n ben efits as a li a bil ity an d an ex pen se w hen , a n d o n ly w hen : ( a ) th e e n te rp ris e h as a p re se n t o bli g ati o n a s a r e su lt o f a p ast e v en t; ( b ) it is p ro bable th at a n o u tf lo w o f r e so u rc es e m bodyin g e co n om ic b en efits w il l b e r e q u ir e d t o s e ttl e t h e o bli g ati o n ; a n d ( c ) a r e lia ble e stim ate c a n b e m ade o f t h e a m ou nt o f t h e o bli g ati o n . 1 34135. An en te rp ris e m ay be co m mit te d , by le g is la tio n, by co ntr a c tu al or oth er a g re e m en ts w ith em plo yee s or th eir re p re se n ta tiv es or by an obli g ati o n base d on bu sin ess p ra ctic e, c u sto m o r a d esir e to a ct e q uita b ly , to m ak e p ay m en ts (o r p ro vid e o th er b en efits ) to e m plo yee s w hen it te rm in ate s th eir em plo ym en t. Such pay m en ts are te rm in atio n ben efit s . T erm in atio n b en efit s a re t y p ic ally l u m p-s u m p ay m en ts , b ut s o m eti m es a ls o i n clu de: ( a ) en han cem en t o f re tir e m en t b en efits o r o f o th er p ost- e m plo ym en t b en efits , e it h er i n dir e ctly t h ro ugh a n e m plo yee b en efit p la n o r d ir e c tly ; a n d ( b ) sa la ry u ntil th e e n d o f a s p ec if ie d n otic e p erio d i f t h e e m plo yee r e n ders n o f u rth er s e rv ic e t h at p ro vid es e co nom ic b en efits t o t h e e n te rp ris e . 1 35136. Som e e m plo yee b en efits a re p ay ab le r e g ard le ss o f th e r e a so n f o r th e e m plo yee’s d ep artu re . T he p ay m en t o f s u ch b en efit s is c erta in (s u bje ct to a n y v estin g o r m in im um s e rv ic e r e q uir e m en ts ) b ut th e tim in g o f th eir p ay m en t is u nce rta in . A lth ough su ch b en efits m ay b e d esc rib ed as te rm in atio n in dem nit ie s, or te rm in atio n gra tu iti e s, th ey are post- e m plo ym en t 43 b en efits , ra th er th an te rm in atio n ben efits an d an en te rp ris e acc o unts fo r th em as post- e m plo ym en t b en efit s . S om e e n te rp ris e s p ro vid e a l o w er l e v el o f b en efit f o r v o lu nta ry t e rm in ati o n a t th e re q uest o f th e e m plo yee (in s u bsta n ce, a p ost- e m plo ym en t b en efit) th an fo r in vo lu nta ry t e rm in atio n at th e re q uest of th e en te rp ris e . T he ad dit io nal ben efit pay ab le on in vo lu nta ry t e rm in atio n i s a t e rm in atio n b en efit . 1 36137. Term in atio n b en efit s a re r e co gn is e d a s a n e x pen se i m med ia te ly . 1 37138. Where a n e n te rp ris e r e co gnis e s t e rm in atio n b en efits , t h e e n te rp ris e m ay a ls o h av e to a cc o unt fo r a c u rta ilm en t o f re ti r e m en t b en efits o r o th er e m plo yee b en efit s (s e e p ara g ra p h 1 10). M ea su rem en t 1 38139. Where te rm in ati o n b en efit s fa ll d u e m ore th an 1 2 m on th s a fte r th e b a la n ce sh ee t d ate , t h ey s h ou ld b e d is c o u nte d u sin g t h e d is c o u nt r a te s p ecif ie d i n p ara gra ph 7 8. D is c lo su re 139140. Where th ere is u ncerta in ty a b out th e n um ber o f e m plo yees w ho w il l a c cep t a n offe r o f te rm in atio n b en efit s , a c o nti n gen t lia b ili ty e x is ts . A s re q uir e d b y A S 2 9, P ro vis io ns, C onti n gen t L ia bili ti e s and C onti n gen t A sse ts an en te rp ris e dis c lo se s in fo rm atio n ab o ut th e co nti n gen t l ia b ili ty u nle ss t h e p ossib il it y o f a n o utf lo w i n s e ttle m en t i s r e m ote . 14 0141. As re q uir e d b y A S 5 , N et P ro fi t o r L oss fo r th e P erio d, P rio r P erio d Ite m s a nd C hanges i n A cc o unti n g P olic ie s a n e n te rp ris e d is c lo se s t h e n atu re a n d a m ount o f a n e x pen se i f i t is o f s u ch s iz e , n atu re o r i n cid en ce t h at i ts d is c lo su re i s r e le v an t t o e x pla in t h e p erf o rm an ce o f t h e e n te rp ris e fo r th e p erio d. T erm in atio n b en efits m ay re su lt in a n e x p en se n ee d in g d is c lo su re in o rd er t o c o m ply w ith t h is r e q uir e m en t. 1 41142. Where re q uir e d b y A S 1 8, R ela te d P arty D is c lo su re s an en te rp ris e d is c lo se s in fo rm ati o n a b out t e rm in ati o n b en efits f o r k ey m an ag em en t p ers o nnel. T ra n sit io n al P ro vis io n s E m plo y ee B en efit s o th er t h an D efin ed B en efit P la n s a n d T erm in atio n B en efit s 1 42143. Where an en te rp ris e fir s t ado pts th is S ta te m en t fo r em plo yee ben efits , th e d if fe re n ce ( a s a dju ste d b y a n y r e la te d d efe rre d ta x e x pen se) b etw een th e li a bil ity in r e sp ect o f e m plo ye e ben efits oth er th an defin ed ben efit pla n s an d te rm in atio n ben efits , as per th is S ta te m en t, e x is tin g o n th e d ate o f a d optin g th is S ta te m en t a n d th e li a bil ity th at w ou ld h ave b een r e co gn is e d a t th e s a m e d ate , a s p er t h e p re -r e vis e d A S 1 5 u nder t h e e n te rp ris e ’s p re vio u s a cco u nti n g polic y, sh ou ld be adju ste d aga in st open in g bala n ce of re v en ue re se rv e s an d su rp lu s. D efin ed B en efit P la n s 1 43144. On f ir st a doptin g t h is S ta te m en t, a n e n te rp ris e s h ou ld d ete rm in e i t s t r a n siti o n al lia bili ty f o r d efin ed b en efit p la n s a t t h at d ate a s: 44 (a ) th e p re se n t v a lu e o f t h e o bli g ati o n ( s e e p ara gra ph 6 5) a t t h e d a te o f a dopti o n ; ( b ) min us t h e f a ir v a lu e, a t t h e d ate o f a dopti o n , o f p la n a sse ts ( if a n y) o u t o f w hic h t h e o bli g atio n s a re t o b e s e ttle d d ir e ctly ( s e e p ara gra ph s 1 00-1 02); ( c ) min us a n y p ast s e rv ic e c o st th at, u n der p ara g ra ph 9 4 , s h ou ld b e r e co gn is e d in l a te r p erio ds. 1 44145. The d if fe re n ce (a s a dju ste d b y a n y re la te d defe rr e d ta x e x pen se) b etw een th e tr a n sitio n al li a bil ity a n d th e li a bil ity th at w ou ld h ave b ee n r e co g n is e d a t th e s a m e d ate, a s p er th e p re -r e v is e d A S 1 5 u nder th e e n te rp ris e ’s p re vio u s a cc o u ntin g p oli c y, s h ou ld b e a d ju ste d im m ed ia te ly , a gain st o pen in g b ala n ce o f r e ven ue r e se rv e s a n d s u rp lu s. E xam ple I ll u str a tin g P ara gra p hs 1 43 144 an d 144145 A t 3 1 M arc h 2 0X 6, a n e n te rp ris e ’s b ala n ce s h eet in clu des a p en sio n li a b il ity of R s. 1 00, re c o gn is e d a s p er th e p re -re v is e d A S 1 5. T he e n te rp ris e a d op ts th e S ta te m en t a s o f 1 A pril 2 0X 6, w hen th e p re se n t v alu e o f th e o blig atio n under t h e S ta te m en t i s R s. 1 ,3 00 a n d t h e f a ir v alu e o f p la n a sse ts i s R s. 1 ,0 00. O n 1 A pril 2 0X 0, th e e n te rp ris e h ad im pro ved p en sio ns ( c o st f o r n on-veste d ben efits : R s. 1 60; a n d a v era g e r e m ain in g p erio d a t tha t d ate u nti l v estin g: 1 0 yea rs ). ( A m ount i n R s.) T he t r a nsiti o nal e ffe c t i s a s f o ll o w s: P re se n t v a lu e o f t h e o blig atio n 1,3 0 0 F air v a lu e o f p la n a sse ts (1 ,0 00) L ess: p ast s e rv ic e c o st t o b e r e c o gnis e d i n l a te r p erio ds ( 1 6 0 x 4 /1 0) (6 4) T ra nsiti o nal l i a bil ity 236 L ia bili ty a lr e a dy r e co gnis e d 100 In cre a se i n l ia b ili ty 136 T his in cre a se in lia bili ty (a s a d ju ste d b y a n y r e la te d d efe rre d ta x ) s h ou ld b e a dju ste d a gain st t h e o pen in g b ala nce o f r e v en ue r e se rv e s a nd s u rp lu s a s o n 1 A pril 2 0X 6. T erm in atio n B en efit s 1 45146. This Sta te m en t re q uir e s im med ia te ex p en sin g of ex pen dit u re on te rm in ati o n ben efits (in clu din g ex p en dit u re in cu rre d on vo lu nta ry re tir e m en t sc h em e (V RS)). H ow ev er, w here an en te rp ris e in cu rs ex pen dit u re on te rm in atio n ben efit s o n or befo re 31st M arc h , 2 009w ith in th re e y ears o f th is S ta te m en t fir s t c o m in g in to e ffe ct, th e e n te rp ris e m ay c h o ose to fo llo w th e a cco untin g p oli c y o f d efe rrin g s u ch e x p en dit u re o ver its p ay -b ac k p erio d. H ow ev er, 45 th e e x pen d itu re s o d efe rre d c an no t b e c a rrie d f o rw ard to a c co untin g p erio ds c o m m en cin g o n o r a fte r 1s t A pril, 2 010 s u bje c t t o a m ax im um o f 5 y ea rs. 46 A ppen d ix A Illu str a tiv e E xam ple T he a ppen dix is il lu str a ti v e o n ly a nd d oes n ot fo rm p art o f th e S ta te m en t. T he p urp ose o f th e a ppen dix is to il lu str a te th e a pplic a ti o n o f th e S ta te m en t to a ss is t in c la rify in g its m ea nin g. E xtr a cts f r o m s ta te m en ts o f p ro fit a n d l o ss a nd b a la nce s h eets a re p ro vid ed t o s h ow t h e e ffe cts o f t h e tr a nsa ctio ns desc rib ed belo w . T hese extr a cts do not nec essa rily co nfo rm w it h all th e d is c lo su re a nd p re se n ta tio n r e q uir e m en ts o f o th er A cco untin g S ta ndard s. B ack gro u n d I n fo rm atio n The fo llo w in g in fo rm ati o n is giv en ab out a fu nded defin ed ben efit pla n . T o keep in te re st c o m puta tio ns s im ple , a ll tr a n sa ctio ns a re a ss u m ed to o ccu r a t th e y ea r e n d. T he p re se n t v alu e o f t h e o bli g atio n a n d t h e f a ir v alu e o f t h e p la n a sse ts w ere b oth R s. 1 ,0 00 a t 1 A pril, 2 0X 4. ( A m ount i n R s.) 20X 4-X 5 20X 5-X 6 20X 6-X 7 Dis c o unt r a te a t s ta rt o f y ear 1 0.0 % 9.0 % 8.0 % Expecte d ra te o f re tu rn o n p lan a sse ts a t s ta rt o f y ea r 1 2.0 % 11.1 % 10.3 % Curre n t s e rv ic e c o st 1 30 140 150 B en efits p aid 150 180 190 C ontr ib uti o ns p aid 90 100 110 P re se n t v alu e o f o blig ati o n a t 3 1 M arc h 1,1 41 1,1 97 1,2 95 F air v alu e o f p la n a sse ts a t 3 1 M arc h 1,09 2 1,1 09 1,0 93 E xpecte d av era g e re m ain in g w ork in g liv es of e m plo yees ( y ears ) 1 0 10 10 In 2 0X 5-X 6, t h e p la n w as a m en ded t o p ro vid e a d diti o nal b en efits w it h e ffe ct f ro m 1 A pril 2 0X 5. T he p re se n t v alu e a s a t 1 A pril 2 0X 5 o f a d ditio n al b en efits f o r e m plo yee s e rv ic e b efo re 1 A pril 2 0X 5 w as R s. 5 0 f o r v este d b en efits a n d R s. 3 0 f o r n on-v este d b en efits . A s a t 1 A pril 2 0X 5, t h e e n te rp ris e e stim ate d th at th e a v era g e p erio d u ntil th e n on-v este d b en efit s w ould b eco m e v este d w as th re e y ears ; th e p ast se rv ic e c o st a ris in g fro m a d diti o nal n on-v este d b en efits is th ere fo re r e co gnis e d o n a s tr a ig h t- lin e b asis o ver th re e y ears . T he p ast s e rv ic e c o st a ris in g f ro m a d d it io nal v este d b en efit s i s r e c o gn is e d i m med ia te ly ( p ara g ra p h 9 4 o f t h e S ta te m en t) . 47 C han ges i n t h e P re se n t V alu e o f t h e O blig atio n a n d i n t h e F air V alu e o f t h e P la n A sse ts T he fir s t s te p is to s u m maris e th e c h an ges in th e p re se n t v alu e o f th e o blig ati o n a n d in th e f a ir v alu e o f th e p la n a sse ts a n d u se th is to d ete rm in e th e a m ount o f th e a c tu aria l g ain s o r lo sse s f o r t h e p erio d. T hese a re a s f o llo w s: (A m ount i n R s.) 20X 4-X 5 20X 5-X 6 20X 6-X 7 Pre se n t v alu e o f o blig ati o n, 1 A pril 1 ,0 00 1,1 41 1,1 9 7 In te re st c o st 1 00 103 96 C urre n t s e rv ic e c o st 1 30 140 15 0 P ast s e rv ic e c o st – ( n on v este d b en efits ) - 30 - P ast s e rv ic e c o st – ( v este d b en efits ) - 50 - B en efits p aid ( 1 50) (1 80) ( 1 9 0) A ctu aria l ( g ain ) l o ss o n o blig atio n (b ala n cin g f ig ure ) 6 1 (8 7) 42 P re se n t v alu e o f o blig ati o n, 3 1 M arc h 1,1 41 1,1 97 1,2 9 5 F air v alu e o f p la n a sse ts , 1 A pril 1 ,0 00 1,0 92 1,1 0 9 E xpecte d r e tu rn o n p la n a ss e ts 1 20 121 11 4 C ontr ib uti o ns 9 0 100 11 0 B en efits p aid ( 1 50) (1 80) ( 1 9 0) A ctu aria l g ain ( lo ss) o n p la n a sse ts (b ala n cin g f ig ure ) 3 2 (2 4) (5 0) F air v alu e o f p la n a sse ts , 3 1 M arc h 1,0 92 1,1 09 1,0 9 3 T ota l actu aria l gain (lo ss ) to be re co gnis e d im m ed ia te ly a s p er t h e S ta te m en t ( 2 9) 63 (9 2) A m ou nts R eco gn is e d i n t h e B ala n ce S heet a n d S ta te m en ts o f P ro fit a n d L oss, a n d R ela te d A naly se s T he f in al s te p i s t o d ete rm in e th e a m ounts t o b e r e co gn is e d i n t h e b ala n ce s h eet a n d s ta te m en t o f p ro fit a n d lo ss, a n d th e re la te d a n aly se s to b e d is c lo se d un der in a c co rd an ce w it h para g ra p hs 1 19120(c ), (e ), (f ), a n d (g ) a n d (j) o f th e S ta te m en t (th e a n aly se s re q uir e d to b e d is c lo se d in acc o rd an ce w ith p ara g ra p h 1 20(c ) a n d ( e ) a re g iv en in th e s e c tio n o f th is A ppen d ix ‘ C han ges in th e P re se n t V alu e o f th e O blig atio n a n d in th e F air V alu e o f th e P la n A sse ts ’). T hese a re a s fo llo w s: (A m ount i n R s.) 20X 4-X 5 20X 5-X 6 20X 6-X 7 Pre se n t v alu e o f t h e o blig atio n 1 ,1 41 1,1 97 1,2 9 5 48 F air v alu e o f p la n a sse ts (1 ,0 92) (1 ,1 09) (1 ,0 93 ) 49 88 20 2 U nre c o gn is e d p ast s e rv ic e c o st – n on v este d b en efits - (2 0) (1 0) L ia b ilit y r e co gn is e d i n b ala n ce s h eet 4 9 68 19 2 C urre n t s e rv ic e c o st 1 30 140 15 0 In te re st c o st 1 00 103 9 6 E xp ecte d r e tu rn o n p la n a ss e ts (1 20) (1 21) (1 14 ) N et a c tu aria l ( g ain ) l o ss r e co gn is e d i n y ear 2 9 (6 3) 9 2 P ast s e rv ic e c o st - n on-v este d b en efit s - 10 1 0 P ast s e rv ic e c o st - v este d b en efits - 50 - E xp en se r ec o gn is e d i n t h e s ta te m en t o f p ro fit a n d l o ss 139 119 23 4 M ovem en ts in th e net li a b ilit y re c o gn is e d in th e bala n ce sh eet, to be dis c lo se d under p ara g ra p h 1 19(e ): O pen in g n et l ia b il ity - 49 6 8 E xp en se a s a b ove 1 39 119 23 4 C ontr ib utio ns p aid (9 0) (1 00) (1 10 ) C lo sin g n et l ia b il ity 4 9 68 19 2 A ctu al r e tu rn o n p la n a sse ts, t o b e d is c lo se d u nder p ara g ra p h 1 19(g ): E xp ecte d r e tu rn o n p la n a ss e ts 1 20 121 11 4 A ctu aria l g ain ( lo ss ) o n p la n a sse ts 32 (2 4) (5 0) A ctu al r e tu rn o n p la n a sse ts 152 97 6 4 N ote : s e e e x am ple i ll u str a tin g p ara g ra p hs 1 03-1 05 f o r p re se n ta tio n o f r e im burs e m en ts . 49 A pp en d ix B Illu str a tiv e D is c lo su res This a p pen dix is il lu str a ti v e o nly a nd d oes n o t fo rm p art o f th e S ta te m en t. T he p urp ose o f th e a ppen dix is to il lu str a te th e a pplic a ti o n o f th e S ta te m en t to a ss is t in c la rify in g its m ea nin g. E xtr a cts fr o m n ote s to th e fin ancia l sta te m en ts sh ow h ow th e re q u ir e d d is c lo su re s m ay b e a ggre g ate d in th e c a se o f a la rg e m ulti - n ati o nal g ro u p th at p ro vid es a v a rie ty o f e m plo ye e b en efit s . T hese ex tr a cts do not necessa rily pro vid e all th e in fo rm ati o n re q uir e d und er th e d is c lo su re a n d p re se n ta tio n r e q u ir e m en ts o f A S 1 5 (2 005) a nd o th er A cco untin g S ta ndard s. In partic u la r, t h ey d o n ot i llu str a te t h e d is c lo su re o f: ( a ) acco u ntin g p oli c ie s fo r em plo yee b en efi ts (s e e A S 1 D is c lo su re o f A cc o unti n g P oli c ie s). P ara gra p h 1 20(a ) o f th e S ta te m en t r e q uir e s th is d is c lo su re to in clu de th e e n te rp ris e ’s a cco un tin g p oli c y f o r r e co g nis in g a ctu aria l g ain s a nd l o sse s. (b ) a g en era l d esc rip tio n o f t h e t y p e o f p la n ( p ara gra ph 1 20(b )). (c ) a n arra tiv e d esc rip tio n o f th e b asis u se d to d ete rm in e th e o ve ra ll e x p ecte d r a te o f r e tu rn o n a sse ts ( p ara gra ph 1 2 0(j) ). (d ) em plo yee b en efit s g ra nte d t o d ir e cto rs a nd k ey m anagem en t p erso nn el ( s e e A S 1 8 R ela te d P arty D is c lo su re s). E m plo yee B en efit O blig atio n s The a m ounts ( in R s.) r e c o gn is e d i n t h e b ala n ce s h eet a re a s f o llo w s: D efin ed b en efit p en sio n p la n s P ost- e m plo ym en t m ed ic al b en efit s 2 0X 5-X 6 20 X 4-X 5 20X 5-X 6 20 X 4-X 5 Pre se n t v alu e o f f u nded o blig atio ns 20,3 0 0 17 ,4 00 - - F air v alu e o f p la n a ss e ts 1 8,4 20 17 ,2 80 - - 1,8 8 0 120 - - P re se n t v alu e o f u nfu nded o blig ati o ns 2 0 00 1000 7,3 37 6,4 05 U nre c o gn is e d p ast s e rv ic e c o st (4 50 ) (6 50) - - N et l ia b ili ty 3 ,4 3 0 470 7,3 37 6,4 05 A m ou nts i n t h e b ala n ce s h ee t: Lia b il it ie s 3 ,4 3 0 560 7,3 37 6,4 05 Asse ts - ( 9 0) - - N et l ia b ili ty 3 ,4 3 0 470 7,3 37 6,4 05 T he p en sio n p la n a sse ts in clu de e q uity s h are s is su ed b y [ n am e o f r e p orti n g e n te rp ris e ] w ith 50 a f a ir v alu e o f R s. 3 17 ( 2 0X 4-X 5: R s. 2 81). P la n a sse ts a ls o in clu de p ro perty o ccu pie d b y [n am e o f r e p ortin g e n te rp ris e ] w it h a f a ir v alu e o f R s. 2 00 ( 2 0X 4-X 5: R s. 1 85). T he a m ounts ( in R s.) r e c o gn is e d i n t h e s ta te m en t o f p ro fit a n d l o ss a re a s f o llo w s: D efin ed b en efit p en sio n p la n s P ost- e m plo ym en t m ed ic a l b en efits 2 0X 5-X 6 20X 4-X 5 20X 5-X 6 20 X 4-X 5 Curre n t s e rv ic e c o st 8 50 75 0 479 411 In te re st o n o bli g atio n 950 1,0 0 0 803 705 E xpec te d r e tu rn o n p la n a sse ts ( 9 00) (6 50 ) N et actu aria l lo sse s (g ain s) re co gn is e d in year 2 650 (6 50 ) 250 400 P ast s e rv ic e c o st 2 00 20 0 - - L osse s (g ain s) on cu rta il m en ts an d se ttle m en ts 1 75 (3 90 ) - - T ota l, in clu d ed in ‘e m plo yee ben efit e x pen se ’ 3 ,9 25 26 0 1,5 32 1,5 16 A ctu al r e tu rn o n p la n a sse ts 6 00 2,2 5 0 - - C han ges in th e p re se n t v alu e o f th e d efin ed b en efit o blig atio n re p re se n tin g re c o ncil ia tio n o f o pen in g a n d c lo sin g b ala n ces t h ere o f a re a s f o llo w s: D efin ed b en efit p en sio n p la n s P ost- e m plo ym en t m ed ic al b en efit s 2 0X 5-X 6 20X 4-X 5 20X 5-X 6 20 X 4-X 5 O pen in g d efin ed b en efit o bli g atio n 18,4 00 11,6 00 6,4 05 5,4 3 9 S erv ic e c o st 8 50 750 479 41 1 In te re st c o st 9 50 1,0 00 803 70 5 A ctu aria l l o sse s ( g ain s) 2 ,3 50 950 250 40 0 L osse s ( g ain s) o n c u rta ilm en ts ( 5 00) - L ia b ili tie s ex ti n gu is h ed on se ttle m en ts - ( 3 50) L ia b ili tie s ass u m ed in an am alg am ati o n in th e natu re of p urc h ase - 5 ,0 00 E xch an ge dif fe re n ces on fo re ig n pla n s 900 (1 50) B en efit s p aid ( 6 50) (4 00) (6 00) (5 50 ) C lo sin g d efin ed b en efit o bli g ati o n 22,3 00 18,4 00 7,3 37 6,4 0 5 C han ges in th e fa ir v alu e o f p la n a ss e ts re p re se n tin g re co ncil ia tio n o f th e o pen in g a n d c lo sin g b ala n ce s t h ere o f a re a s f o ll o w s: 51 D efin ed b en efit p en sio n p la n s 20X 5-X 6 20X 4-X 5 O pen in g f a ir v alu e o f p la n a sse ts 1 7,2 80 9,2 00 E xp ecte d r e tu rn 9 00 650 A ctu aria l g ain s a n d ( lo ss e s) (3 00) 1,6 00 A ss e ts d is tr ib ute d o n s e ttl e m en ts ( 4 00) - C ontr ib utio ns b y e m plo yer 7 00 350 A ss e ts a cq uir e d in a n a m alg am atio n in t h e n atu re o f p urc h ase - 6 ,0 00 E xch an ge dif fe re n ce s on fo re ig n pla n s 890 (1 20) B en efit s p aid ( 6 50) (4 00) 18,4 20 17,2 80 T he G ro up e x pects t o c o ntr ib ute R s. 9 00 t o i t s d efin ed b en efit p en sio n p la n s i n 2 0X 6-X 7. T he m ajo r c a te g o rie s o f p la n a sse ts a s a p erc en ta g e o f t o ta l p la n a sse ts a re a s f o llo w s: D efin ed b en efit p en sio n p la n s P ost- e m plo ym en t m ed ic al b en efits 2 0X 5-X 6 20X 4-X 5 20X 5-X 6 20 X 4-X 5 Govern m en t o f I n dia S ecu ritie s 8 0% 82% 78 % 81% H ig h q ualit y c o rp ora te b onds 11% 10% 12 % 12% E quity s h are s o f l is te d c o m pan ie s 4 % 3% 10 % 7% P ro perty 5 % 5% - - P rin cip al a c tu aria l a ss u m ptio ns a t t h e b ala n ce s h ee t d ate ( e x pre sse d a s w eig h te d a v era g es): 2 0 X 5-X 6 20X 4-X 5 Dis c o unt r a te a t 3 1 M arc h 5 .0 % 6.5 % E xpecte d r e tu rn o n p la n a ss e ts a t 3 1 M arc h 5 .4 % 7.0 % P ro porti o n o f e m plo yees o ptin g f o r e a rly r e tir e m en t 30% 30 % Annual i n cre a se i n h ealt h ca re c o sts 8 % 8% Futu re c h an ges i n m ax im um s ta te h ealt h c are b en efit s 3 % 2% The estim ate s o f fu tu re sa la ry in cre ase s, co nsid ere d in ac tu aria l valu ati o n, ta k e ac co unt o f in fla tio n, se n io rity , p ro m oti o n a n d o th er re le v an t fa cto rs , su ch a s su pply a n d d em an d in th e em plo ym en t m ark et. A ssu m ed h ea lth care c o st tr e n d ra te s h av e a s ig n if ic an t e ffe ct o n th e a m ounts re c o gn is e d in th e sta te m en t o f p ro fit a n d lo ss. A t p re se n t, h ealt h care c o sts , a s in d ic a te d in th e p rin cip al a ctu aria l a ssu m pti o n g iv en a b ove, a re e x pecte d to in cre a se a t 8 % p .a . A o ne p erc en ta g e p oin t c h an ge in 52 assu m ed h ealt h care c o st tr e n d ra te s w ould h av e th e fo llo w in g e ffe c ts o n th e a g gre g ate o f th e se rv ic e c o st a n d i n te re st c o st a n d d efin ed b en efit o blig atio n : O ne p erc en ta g e p oin t i n cre ase O ne p erc e n ta g e p oin t d ecre a se E ffe ct on th e ag gre g ate of th e se rv ic e c o st a n d i n te re st c o st 1 90 (1 50) E ffe ct o n d efin ed b en efit o bli g ati o n 1,0 00 (9 00) A m ounts f o r t h e c u rre n t a n d p re v io us f o ur p erio ds a re a s f o llo w s: D efin ed b en efit p en sio n p la n s 20X 5-X 6 20X 4-X 5 20X 3-X 4 20X 2-X 3 20X 1-X 2 Defin ed b en efit o b lig ati o n (2 2,3 00) (1 8,4 00) (1 1,6 00) (1 0,5 82) (9 ,1 44) P la n a sse ts 1 8 ,4 20 17 ,2 80 9,2 00 8,5 02 10 ,0 00 S urp lu s/( d efic it) ( 3 ,8 80) (1 ,1 20) (2 ,4 00) (2 ,0 80) 856 E xperie n ce ad ju stm en ts on pla n lia b ili ti e s (1 ,1 11) (7 68) (6 9) 543 (6 42) E xperie n ce ad ju stm en ts on pla n asse ts ( 3 00) 1,6 00 (1 ,0 78) (2 ,8 90) 2,7 77 P ost- e m plo ym en t m ed ic al b en efit s 2 0X 5-X 6 20X 4-X 5 20X 3-X 4 20 X 2-X 3 20X 1-X 2 Defin ed b en efit o b lig ati o n 7,3 37 6,4 05 5,4 39 4,9 23 4,2 21 E xperie n ce a d ju stm en ts o n p la n lia b ili ti e s (2 32) 829 4 90 (1 74) (1 03) T he g ro u p a ls o p artic ip ate s in a n in dustr y -w id e d efin ed b en efit p la n w hic h p ro vid es p en sio ns lin ked to f in al s a la rie s a n d is f u nded in a m an ner s u ch t h at c o n tr ib u tio ns a re s e t a t a l e v el t h at is e x pec te d t o b e s u ffic ie n t t o p ay t h e b en efit s f a llin g d ue i n t h e s a m e p erio d. I t i s n ot p ra c tic ab le t o dete rm in e th e p re se n t v alu e o f th e g ro up’s o bli g atio n o r th e re la te d c u rre n t s e rv ic e c o st a s th e p la n c o m pute s it s o bli g ati o ns o n a b asis th at d if fe rs m ate ria lly f ro m th e b asis u se d in [ n am e o f re p ortin g e n te rp ris e ]’s fin an cia l s ta te m en ts . [d esc rib e b asis ] O n th at b asis , th e p la n ’s fin an cia l s ta te m en ts to 3 0 S ep te m ber 2 0X 3 sh ow an u nfu nded li a b il it y o f R s. 2 7,5 25. T he u nfu nd ed lia b ili ty w il l re su lt in fu tu re p ay m en ts b y p artic ip atin g e m plo yers . T he p la n h as a p pro x im ate ly 7 5,0 00 m em bers , o f w hom a p pro xim ate ly 5 ,0 00 a re c u rre n t o r fo rm er e m plo yees o f [n am e o f re p ortin g e n te rp ris e ] o r th eir d ep en dan ts . T he e x pen se r e c o gn is e d in th e s ta te m en t o f p ro fit a n d lo ss, w hic h is e q ual to c o ntr ib utio ns d ue f o r th e y ear, a n d is n o t in clu ded in th e a b o ve a m ounts , w as Rs. 230 (2 0X 4-X 5: Rs. 215). The gro up’s fu tu re co ntr ib uti o ns m ay be in cre a se d su bsta n ti a ll y i f o th er e n te rp ris e s w it h dra w f ro m t h e p la n . T he a ppen dix is il lu str a ti v e o n ly a nd d oes n ot fo rm p art o f th e S ta te m en t. T he p urp ose o f th e a ppen dix is to il lu str a te th e a pplic a ti o n o f th e S ta te m en t to a ss is t in c la rify in g its m ea nin g. E xtr a cts fr o m n ote s to th e fin ancia l sta te m en ts sh ow h ow th e re q u ir e d d is c lo su re s m ay b e a ggre g ate d in th e c a se o f a la rg e m ulti-n ati o nal g rou p th at p ro vid es a v a rie ty o f e m plo ye e 53 b en efit s . T hese e x tr a cts d o n ot n ece ss a ril y c o nfo rm w ith a ll th e d is c lo su re a nd p re se n ta ti o n re q uir e m en ts o f o th er A cco un tin g S ta ndard s. In p artic u la r, th ey d o n ot il lu str a te th e d is c lo su re o f: ( a ) acco u ntin g p oli c ies fo r em plo yee b en efi ts (s e e A S 1 D is c lo su re o f A cco untin g P oli c ie s). U nder para g ra ph 119(a ) of th e Sta te m en t, th is dis c lo su re sh ou ld in clu de th e e n te rp ris e ’s a cco u ntin g p olic y fo r re co g nis in g a ctu aria l g ain s a nd lo sse s; o r (b ) em plo yee b en efit s g ra nte d t o d ir e cto rs a nd k ey m anagem en t p erso nn el ( s e e A S 1 8 R ela te d P arty D is c lo su re s). E m plo yee B en efit O blig atio n s The a m ounts ( in R s.) r e c o gn is e d i n t h e b ala n ce s h eet a re a s f o llo w s: D efin ed b en efit p en sio n pla n s P ost-e m plo ym en t m ed ic al b en efit s 2 0X 5-X6 20 X4-X 5 20X 5-X6 20 X 4-X 5 Pre se n t v alu e o f f u nded o blig atio ns 12,3 10 11 ,7 72 2,8 19 2,7 21 F air v alu e o f p la n a ss e ts ( 1 1,9 82 ) (1 1 ,1 88) (2 ,4 80) (2 ,4 15) 32 8 584 339 306 P re se n t v alu e o f u nfu nded o blig ati o ns 6 ,3 6 2 6,1 06 5,1 91 5,1 66 U nre c o gn is e d p ast s e rv ic e c o st (4 50 ) (6 50) - - N et l ia b ili ty i n b ala n ce s h ee t 6 ,2 4 0 6,0 40 5,5 30 5,4 72 A m ou nts i n t h e b ala n ce s h ee t: lia b il iti e s 6 ,4 5 1 6,2 78 5,5 30 5,4 72 asse ts ( 2 11 ) (2 38) - - N et l ia b ili ty i n b ala n ce s h ee t 6 ,2 4 0 6,0 40 5,5 30 5,4 72 T he p en sio n p la n a sse ts in clu de e q uity s h are s is su ed b y [ n am e o f r e p orti n g e n te rp ris e ] w ith a f a ir v alu e o f R s. 3 17 ( 2 0X 4-X5: R s. 2 81). P la n a sse ts a ls o in clu de p ro perty o ccu pie d b y [n am e o f r e p ortin g e n te rp ris e ] w it h a f a ir v alu e o f R s. 2 00 (2 0X 4-X5: R s. 1 85). T he a m ounts ( in R s.) r e c o gn is e d i n t h e s ta te m en t o f p ro fit a n d l o ss a re a s f o llo w s: D efin ed b en efit p en sio n p la n s P ost-e m plo ym en t m ed ic a l b en efits 2 0X 5-X6 20X 4-X5 20X 5-X6 20 X 4-X 5 Curre n t s e rv ic e c o st 1 ,6 79 1,5 5 4 471 411 In te re st o n o bli g atio n 1,8 90 1,6 5 0 819 705 E xpec te d r e tu rn o n p la n a sse ts ( 1 ,3 92) (1 ,1 88 ) (2 91) (2 66) N et actu aria l lo sse s (g ain s) re co gn is e d in year 9 0 (1 87 ) - - 54 P ast s e rv ic e c o st 2 00 20 0 - - L osse s (g ain s) on cu rta il m en ts an d se ttle m ents 2 21 (4 7) - - T ota l, i n clu ded i n ‘ s ta ff c o sts ’ 2 ,6 88 1,9 8 2 999 850 A ctu al r e tu rn o n p la n a sse ts 1 ,2 32 1,2 0 5 275 254 M ovem en ts i n t h e n et l ia b ilit y r e co gnis e d i n t h e b ala n ce s h eet a re a s f o llo w s: D efin ed b en efit p en sio n p la n s P ost-e m plo ym ent m ed ic al b en efits 2 0 X 5-X 6 20X 4-X5 20X 5-X6 20 X 4-X 5 Net l ia b ili ty a t s ta rt o f y ea r 6 ,0 40 5,5 0 5 5,4 72 5 ,4 39 N et e x pen se r e c o gn is e d i n t h e s ta te m en t o f p ro fit a n d l o ss 2 ,6 88 1,9 8 2 9 99 850 C ontr ib utio ns (2 ,2 61) (1 ,9 8 8) (9 4 1) (8 17) E xch ang e d if fe re n ce s o n f o re ig n p la n (2 27) 2 2 1 - - L ia b ili tie s a cq u ir e d in a n a m alg am atio n in t h e n atu re o f p urc h ase - 3 2 0 - - N et l ia b ili ty a t e n d o f y ear 6 ,2 40 6,0 4 0 5,5 30 5 ,4 72 P rin cip al a c tu aria l a ss u m ptio ns a t t h e b ala n ce s h ee t d ate ( e x pre sse d a s w eig h te d a v era g es): 2 0 X 5-X 6 20X 4-X5 Dis c o unt r a te a t 3 1 M arc h 1 0 .0 % 9.1 % Expecte d r e tu rn o n p la n a ss e ts a t 3 1 M arc h 1 2 .0 % 10.9 % Futu re s a la ry i n cre ase s 5 % 4% Futu re p en sio n i n cre ase s 3 % 2% Pro porti o n o f e m plo yees o ptin g f o r e a rly r e tire m en t 30% 30 % Annual i n cre a se i n h ealt h c are c o sts 8 % 8% Futu re c h an ges i n m ax im um s ta te h ealt h c are b en efit s 3 % 2% The g ro u p a ls o p artic ip ate s in a n in dustr y-w id e d efin ed b en efit p la n w hic h p ro vid es p en sio ns lin ked to f in al s a la rie s a n d is f u nded in a m an ner s u ch t h at c o n tr ib utio ns a re s e t a t a l e v el t h at is e x pec te d t o b e s u ffic ie n t t o p ay t h e b en efit s f a llin g d ue i n t h e s a m e p erio d. I t i s n ot p ra c tic ab le t o dete rm in e th e p re se n t v alu e o f th e g ro up’s o bli g atio n o r th e re la te d c u rre n t s e rv ic e c o st a s th e p la n c o m pute s it s o bli g ati o ns o n a b asis th at d if fe rs m ate ria lly f ro m th e b asis u se d in [ n am e o f re p ortin g e n te rp ris e ]’s fin an cia l s ta te m en ts . [d esc rib e b asis ] O n th at b asis , th e p la n ’s fin an cia l s ta te m en ts to 3 0 S ep te m ber 2 0X 3 sh ow an u nfu nded lia b il it y o f R s. 2 7,5 25. T he u nfu n ded lia b ili ty w il l re su lt in fu tu re p ay m en ts b y p artic ip atin g e m plo yers . T he p la n h as a p pro xim ate ly 7 5,0 00 m em bers , o f w hom a p pro xim ate ly 5 ,0 00 a re c u rre n t o r fo rm er e m plo yees o f [n am e o f re p ortin g e n te rp ris e ] o r th eir d ep end an ts . T he e x pen se r e c o gn is e d in th e s ta te m en t o f p ro fit a n d lo ss, w hic h is e q ual to c o ntr ib utio ns d ue f o r th e y ear, a n d is n ot in clu ded in th e a b ove a m ounts , w as Rs. 230 (2 0X 4-X5: Rs. 215). The gro up’s fu tu re co ntr ib uti o ns m ay be in cre a se d su bsta n ti a ll y if o th er e n te rp ris e s w it h dra w f ro m t h e p la n . 55 A ppen d ix C Note : This A ppen dix is n ot a p art o f th e A cco untin g S ta ndard . T he p urp ose o f th is a ppen dix is o nly to b rin g o ut th e m ajo r d if fe re n ces b etw een A cco untin g S ta n dard 1 5 (r e v is e d 2 005 ) a nd c o rre sp ondin g In te rn atio nal A cc o unti n g S ta nda rd (I A S) 1 9, E m plo yee B en efi ts (a s a m en ded in D ecem ber 2 004). C om paris o n w it h I A S 1 9, E m plo yee B en efit s ( a s a m en ded i n D ece m ber 2 004) R ev is e d A S 1 5 (2 005) d if fe rs fro m In te rn atio nal A cco untin g S ta n dard (IA S) 1 9, E m plo yees B en efi ts , i n t h e f o llo w in g m ajo r r e sp ec ts : 1 . Rec o gn it io n o f A ctu aria l G ain s a n d L oss e s I A S 1 9 p ro vid es o pti o ns t o r e co gn is e a ctu aria l g ain s a n d l o sse s a s f o llo w s: ( i) by f o ll o w in g a ‘ C orrid or A ppro ac h ’, w hic h r e su lts i n d efe rre d r e co gn iti o n o f t h e a ctu aria l g ain s a n d l o sse s, o r ( ii) im med ia te ly i n t h e s ta te m en t o f p ro fit a n d l o ss, o r ( iii ) im med ia te ly o uts id e t h e p ro fit o r l o ss i n a s ta te m en t o f c h an ges i n e q uity t i tle d ‘ s ta te m en t o f r e co gn is e d i n co m e a n d e x pen se ’. T he re v is e d A S 1 5 (2 005) d oes n ot a d m it o ptio n s a n d re q uir e s th at a ctu aria l g ain s a n d lo sse s s h ou ld b e re c o gn is e d im med ia te ly in th e sta te m en t o f p ro fit a n d lo ss . T he fo llo w in g a re th e r e aso ns o f r e q uir in g i m m ed ia te r e co gn itio n i n t h e s ta te m en t o f p ro fit a n d l o ss: ( a ) Defe rre d re c o gn it io n a n d ‘c o rrid or’ a p pro ach es a re c o m ple x , a rtif ic ia l a n d d if fic u lt to u nders ta n d. T hey a d d t o c o st b y r e q uir in g e n te rp ris e s t o k eep c o m ple x r e c o rd s. T hey a ls o r e q uir e c o m ple x p ro vis io ns to d eal w it h c u rta ilm en ts , s e tt le m en ts a n d tr a n sitio nal m atte rs . A ls o , a s s u ch a p pro ach es a re n o t u se d f o r o th er u ncerta in a sse ts a n d lia b il iti e s, it is n ot a p pro pria te to u se th e s a m e f o r p ost- e m plo ym en t b en efits . ( b ) Im med ia te r e co gn itio n o f a c tu aria l g ain s a n d lo ss e s r e p re se n ts f a ith fu lly th e e n te rp ris e ’s f in an cia l p o sitio n . A n e n te rp ris e w il l r e p ort a n a sse t o nly w hen a p la n i s i n s u rp lu s a n d a l ia b ilit y o nly w hen a pla n has a defic it. P ara g ra p h 94 of th e Fra m ew ork fo r th e P re p ara tio n an d P re se n ta tio n o f F in an cia l S ta te m en ts n ote s t h at th e a p plic atio n o f th e m atc h in g c o ncep t d o es n ot a ll o w th e r e c o gn it io n o f it e m s in th e b ala n ce s h eet w hic h d o n ot m ee t th e d efin itio n o f a ss e ts o r l ia b ili ti e s. D efe rre d a ctu aria l lo ss e s d o n o t re p re se n t fu tu re b en efits a n d h en ce d o n ot m ee t th e F ra m ew ork ’s d efin iti o n o f a n a sse t, e v en if o ffs e t a g ain st a r e la te d lia b ilit y . S im ila rly , d efe rre d a ctu aria l g ain s d o n ot m eet t h e F ra m ew ork ’s d efin iti o n o f a l i a b ilit y . ( c ) Im med ia te r e co gn itio n o f a ctu aria l g ain s a n d lo sse s g en era te s in co m e a n d e x pen se ite m s t h at a re n ot a rb itr a ry a n d t h at h av e i n fo rm ati o n c o nte n t. ( d ) The p rim ary a rg u m en t f o r th e ‘ c o rrid or a p pro ach ’ is t h at in th e lo ng te rm , a ctu aria l g ain s a n d l o sse s m ay o ffs e t o ne a n oth er. H ow ev er, i t i s n ot r e aso nab le t o a ss u m e t h at a ll a c tu aria l g ain s 56 o r lo sse s w il l b e o ffs e t in f u tu re y ears ; o n th e c o ntr a ry , if th e o rig in al a c tu aria l a ssu m ptio ns a re s till v ali d , fu tu re flu ctu atio ns w ill , o n a v era g e, o ffs e t e ach o th er a n d th us w il l n ot o ffs e t p ast f lu ctu atio ns. ( e ) Defe rre d re c o gn it io n by usin g th e ‘c o rrid or ap pro ac h ’ att e m pts to av o id vo la til ity . H ow ev er, a f in an cia l m ea su re s h ould b e v o la ti le if it p urp orts to r e p re se n t f a it h fu lly t r a n sa ctio ns a n d o th er e v en ts t h at a re t h em se lv es v ola tile . ( f ) Im med ia te re c o gn it io n is c o nsis te n t w it h A S 5 , N et P ro fit o r L oss fo r th e P erio d, P rio r P erio d Ite m s and C hanges in A cco untin g P olic ie s. U nd er A S 5, th e effe ct of ch an ges in a cc o unti n g e stim ate s s h ould b e in clu ded in n et p ro fit o r lo ss f o r th e p erio d if th e c h an ge a ffe cts t h e c u rre n t p erio d o nly b ut n ot f u tu re p erio ds. A ctu aria l g ain s a n d lo sse s a re n ot a n e stim ate o f f u tu re e v en ts , b ut re su lt fro m e v en ts b efo re th e b ala n ce s h eet d ate th at re so lv e a p ast e stim ate ( e x perie n ce a d ju stm en ts ) o r fro m c h an ges in th e e sti m ate d c o st o f e m plo yee s e rv ic e b efo re th e b ala n ce s h ee t d ate ( c h an ges i n a c tu aria l a ss u m pti o ns). ( g ) Any a m ortis a tio n p erio d ( o r t h e w id th o f a ‘ c o rrid or’) i s a rb itr a ry . ( h ) Actu aria l g ain s a n d lo sse s a re it e m s o f in co m e a n d e x pen se . R eco gn iti o n o f s u ch ite m s o uts id e t h e s ta te m en t o f p ro fit a n d l o ss, a s p er t h e o pti o n ( iii ) a b ove i s n ot a p pro pria te . ( i) Im med ia te r e co gn itio n re q uir e s le ss d is c lo su re b eca u se a ll a ctu aria l g ain s a n d lo sse s a re r e co gnis e d . ( j) Im med ia te r e co gniti o n i s a ls o p erm itte d u nder I A S 1 9. P ro vid in g o nly o n e t r e a tm en t i s i n l in e w it h t h e I C A I’s e n deav our t o e lim in ate a lte rn ati v es, t o t h e e x te n t p ossib le . ( k ) The e x is ti n g A S 1 5 (1 995) a ls o re q uir e s im med ia te re c o gn it io n o f a ctu aria l g ain s a n d l o sse s. 2 . Rec o gn it io n o f D efin ed B en efit A sse t B oth I A S 1 9 a n d r e v is e d A S 1 5 ( 2 005) s p ec if y a n ‘ a sse t c e ili n g’ i n c ase o f a s itu atio n o f d efin ed b en efit a sse t. A S 1 5 ( 2 005) p ro vid es t h at t h e a sse t s h ould b e r e c o gn is e d o nly t o t h e e x te n t o f t h e p re se n t valu e of an y ec o nom ic b en efits av ail a b le in th e fo rm o f re fu nds fro m th e p la n o r r e d uctio ns in f u tu re c o ntr ib uti o ns to th e p la n . I A S 1 9, o n th e o th er h an d , p ro vid es th at t h e a sse t s h ou ld b e re co gn is e d to th e e x te n t o f th e to ta l o f (i) a n y c u m ula ti v e u nre co gn is e d n et a ctu aria l l o sse s a n d p ast s e rv ic e c o st; a n d ( ii ) th e p re se n t v alu e o f a n y e co nom ic b en efits a v aila b le in th e f o rm o f r e fu nds f ro m t h e p la n o r r e d ucti o ns i n f u tu re c o ntr ib uti o ns t o t h e p la n . I A S 1 9, h ow ev er, a ls o p ro vid es th at th e a p p lic ati o n o f th is s h ould n ot r e su lt in a g ain b ein g r e c o gn is e d s o le ly a s a r e su lt o f a n a ctu aria l lo ss o r p ast s e rv ic e c o st in th e c u rre n t p erio d o r in a lo ss b ein g r e co gn is e d s o le ly a s a r e su lt o f a n a c tu aria l g ain i n t h e c u rre n t p erio d. T he a sp ec t w ith re g ard to u n re co gnis e d n et a c tu aria l lo ss e s is n ot re le v an t in th e c o nte x t o f r e v is e d A S 1 5 ( 2 005) s in ce it d oes n ot p erm it th e a d o ptio n o f ‘ c o rrid or a p pro ach ’. I n r e sp ect o f p ast s e rv ic e c o st, it is f e lt th at in a s it u atio n o f d efin ed b en efit a sse t, th e a sse t, to th e e x te n t o f u nre c o gn is e d p ast s e rv ic e c o st, s h ould n ot b e r e q uir e d to b e r e co gnis e d in v ie w o f th e p ru den ce c o nsid era ti o n f o r p re p ara tio n o f f in an cia l s ta te m en ts . 57 3 . D is c lo su res A s c o m pare d to IA S 1 9, A S 1 5 (2 005) re q uir e s le sse r d is c lo su re s in re sp ect o f d efin ed b en efit p la n s c o nsid erin g th e in fo rm ati o n o verlo ad . F or e x am ple , w hile IA S 1 9 re q uir e s d is c lo su re o f s e n siti v ity i n fo rm atio n, f iv e y ea r h is tor ie s o f p re se n t v alu e o f t h e d efin ed b en efit o blig atio n s, f a ir v alu e o f p la n a ss e ts , e x perie n ce a d ju stm en ts a ris in g o n p la n l i a b ilit ie s a n d p la n a ss e ts e tc ., A S 1 5 does n o t r e q uir e t h e s a m e. 43. Ter m in atio n B en efit s – R ec o gn it io n o f L ia b il it y IA S 1 9 p ro vid es th at a n e n te rp ris e s h ould re co gn is e te rm in ati o n b en efits a s a lia b il ity a n d a n e x pen se w hen , a n d o nly w hen , th e e n te rp ris e is d em on str a b ly c o m mitte d to e it h er ( a ) te rm in ate t h e e m plo ym en t o f a n e m plo yee o r g ro up o f e m plo yees b efo re th e n orm al r e tir e m en t d ate ; o r ( b ) p ro vid e te rm in ati o n ben efits as a re su lt of an offe r m ad e in ord er to en co ura g e vo lu nta ry r e d undan cy . It fu rth er p ro vid es th at a n e n te rp ris e is d em onstr a b ly c o m mitte d to a te rm in ati o n w hen , a n d o nly w hen , t h e e n te rp ris e h as a d eta il e d f o rm al p la n f o r t h e t e rm in ati o n a n d i s w ith o ut r e alis ti c p ossib ilit y o f w it h dra w al. I t is f e lt th at m ere ly o n th e b asis o f a d eta ile d f o rm al p la n , it w ould n ot b e a p pro pria te to re c o gn is e a p ro vis io n s in ce a lia b ili ty c a n not b e c o nsid ere d to b e c ry sta lis e d a t th is s ta g e. A cc o rd in gly , th e r e v is e d A S 1 5 ( 2 005) p ro vid es c rit e ria f o r r e co gn it io n o f li a b ilit y in re sp ect o f te rm in atio n b en efits o n th e li n es o f A S 2 9, P ro vis io ns, C ontin gen t L ia bil iti e s a nd C ontin gen t A sse ts . 54. Tra n sit io n al P ro vis io n s In re sp ect of tr a n siti o nal lia b ili ty fo r defin ed ben efit pla n s, IA S 19 pro vid es th at if th e t r a n sitio nal lia b ili ty is m ore th an th e lia b il ity th at w ould h av e b ee n r e c o gn is e d a t th e s a m e d ate u nder th e e n te rp ris e ’s p re v io us a cc o unti n g p olic y , th e e n te rp ris e sh o uld m ak e a n ir re v o cab le c h oic e to re co gn is e th at in cre ase a s p art o f it s d efin ed b en efit li a b ilit y (a ) im med ia te ly , u nd er I A S 8 N et P ro fi t o r L oss fo r th e P erio d, F undam en ta l E rro rs a nd C han ges in A cc o unti n g P oli c ie s; o r (b ) a s a n e x pen se o n a str a ig h t- lin e b asis o ver u p to fiv e y ea rs fro m th e d ate o f a d optio n s u bje ct t o c e rta in c o nditio ns. I A S 1 9 a ls o r e q uir e s t h at i f th e t r a n siti o nal l i a b ilit y i s le ss t h an th e lia b ili ty th at w ould h av e b een re co gn is e d at th e sa m e d ate under th e en te rp ris e ’s p re v io us a c co untin g p oli c y , t h e e n te rp ris e s h ould r e c o gn is e t h at d ecre ase i m med ia te ly u nd er I A S 8 . T he r e v is e d A S 1 5 ( 2 005), o n t h e o th er h an d, p ro vid es n o c h oic e i n t h is r e g ard , a n d r e q uir e s th at t h e d if fe re n ce b etw een th e tr a n siti o nal li a b ilit y a s p er th is S ta te m en t a n d th e li a b ilit y th at w ould h av e b een re c o gn is e d as p er th e p re -re v is e d A S 1 5under th e e n te rp ris e ’s p re v io us a cc o unti n g p olic y, s h ould b e a d ju ste d a g ain st th e o pen in g b ala n ce o f re v en ue re se rv es a n d s u rp lu s. T his tr e a tm en t is in lin e w ith th e tr a n sit io nal pro vis io ns pro vid ed in oth er In dia n A cc o unti n g S ta n dard s. I n re sp ect o f te rm in ati o n b en efits , th e re v is e d A S 1 5 (2 005), c o nsid erin g th at th e in d ustr y in I n dia at p re se n t is p assin g th ro ugh a re str u ctu rin g p hase , sp ecif ic a lly co nta in s a tr a n sit io nal p ro vis io n p ro vid in g th at w here a n e n te rp ris e in cu rs e x p en dit u re o n te rm in ati o n b en efits o n o r b efo re 31st M arc h , 2009w it h in th re e yea rs of th is Sta te m en t fir s t co m in g in to effe c t, th e en te rp ris e m ay c h oose t o f o ll o w t h e a cco untin g p olic y o f d efe rrin g s u ch e x pen ditu re o ver i ts p ay - b ack p erio d . H ow ev er, th e e x pen dit u re so d efe rre d c an not b e c arrie d fo rw ard to a cc o unti n g 58 p erio ds c o m m en cin g o n o r a fte r 1st A pril, 2 010 s u bje ct to a m ax im um o f 5 y ears. I A S 1 9 d oes n ot p ro vid e s u ch a t r a n siti o nal p ro vis io n. _ ___ ___ _