Pearl Inc., a calendar-year entity, amends its defined benefit pension plan on January 1, 2009 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2012 pension expense (or revenue). The pertinent facts as of January 1, 2009 are:
Increase in PSC-vested employees: $5,000
Increase in PSC-non-vested employees: $2,000
Remaining vesting period-non-vested employees: 5 years
Remaining working life-vested employees: 10 years
Remaining working life-non-vested employees: 20 years
I) Calculate the past service costs included in 2009 net pension expense (or revenue) under IAS 19.
II) Calculate the past service costs included in 2009 net pension expense (or revenue) under US GAAP
IAS 19 just changed the treatment. Here is a summary of the changes:
Since you ask for 2009 treatment, I am going to give it to you both way, before and after the 2011 change.
For prior service costs, IAS 19 amortizes the nonvested over the vesting period and expenses the vested portion ...
Your tutorial explains the change in IAS 19 in 2011 and give you the solution before and after the change as well as the US GAAP computation. A reference is given.