Users and Objectives:
Peter Black – Need to review F/S and detailed analysis of the two pension plans to determine whether he should keep or sell the shares
Air Canada senior executive – Since they have a transition to the defined contribution pension plan + conversion to IFRS, shareholders of Air Canada may contemplate to sell their shares (as in Black’s case), in which it will affect Air Canada’s market share. Thus they might have to re-structure their strategic planning for the future years
Current shareholders of Air Canada – Same reason as Black as they need to understand the impact of the new …show more content…
This resulted in various changes to accounting policies, having impact on the financial statements. It also had an effect on how the defined benefit pension plan were measured and presented in the financial statements. Under IAS 19, actuarial gains and losses could be :
Alternative 1: recognized in profit or loss under the corridor approach
This method allows for deferral of such gains and losses as it is not required to recognize all such gains and losses immediately. Recognition of such gains and losses are required only if the accumulated unrecognized actuarial gains and losses exceed 10% of the greater of the defined benefit obligation or the fair value of the plan assets.
Implications : The Actuarial gains and losses that do not breach the 10% limits described above need not be recognised. This directly impacts the income statement and the underlying asset/liability associated with benefit