SA Pvt Ltd is engaged in the business of retail having 100 retail outlets across Northern and Southern India. The company's head office is located…

CA Final · Financial Reporting · MTP · November 2024
SA Pvt Ltd is engaged in the business of retail having 100 retail outlets across Northern and Southern India. The company's head office is located at Chennai. SA Pvt Ltd is a subsidiary of SAG Ltd. SAG Ltd is listed on the National Stock Exchange in India. Following information is available for SA Pvt Ltd: Plan Assets At 1st April, 20X1, the fair value of plan assets was - 10,000. Contribution to the plan assets done on 31st March, 20X2 - 3,000 Amount paid on 31st March, 20X2 - 300 At 31st March, 20X2, the fair value of plan assets was - 14,700 Actual return on plan assets - 2,000 Defined Benefit Obligation At 1st April, 20X1, present value of the defined benefit obligation was - 12,000. At 31st March, 20X2, present value of the defined benefit obligation was - 15,500. Actuarial losses on the obligation for the year ended 31st March, 20X2 were - 100. Current Service Cost - 2,500 Benefit paid - 300 Discount rate used to calculate defined benefit liability - 10%. Suggest the amount that would be taken to other comprehensive income (with workings). Also compute net interest on the net defined benefit liability (asset).

Suggested Answer and Working Notes:

As per Ind AS 19, net remeasurement of 900would be recognized in other comprehensive income. Computation of Net remeasurement = Remeasurement - Actuarial loss = 1000 (Refer WN - 1) - 100 (Given in the question) = 900. Computation of net interest expense Particulars ₹ Defined benefit liability as at 1st April 20X1 (A) (Given in the question) 12,000 Fair value of plan asset as at 1st April 20X1 (B) (Given in the question) (10,000) Net defined benefit liability (A - B) 2,000 Net interest expense (as it is net liability) (Refer note given below) 200 Note: Net interest expense would be computed on net defined benefit liability using discount rate of 10% given in the question- = Net defined benefit liability x Discount rate = 2,000 x 10% = 200. Working Note: Computation of amount of remeasurement Particulars ₹ Actual return on plan asset for the year ended 31st March 20X2 (Given in the question) (C) 2,000 Less: Interest income on 10,000 held for 12 months at 10% (D) (1,000) Remeasurement (E = C - D) 1,000

Topics: Ind AS 19, Ind AS 1

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