In an amendment to FRS 102, the Financial Reporting Council (FRC) has confirmed that the impact of employers transitioning from defined contribution accounting to defined benefit accounting is to be recognised in ‘other comprehensive income’ in the accounts.
The FRC had become aware that some multi-employer defined benefit plans were looking to provide, for the first time, sufficient information to enable participating employers to use defined benefit accounting. This would require employers to transition from defined contribution accounting to defined benefit accounting for these defined benefit plans.
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland did not clearly address the transition for multi-employer defined benefit plans. The FRC’s response is Amendments to FRS 102: Multi-employer defined benefit plans (bit.ly/2MfFXyX), setting new and explicit requirements for the transition from defined contribution accounting to defined benefit accounting when sufficient information becomes available.
The amendments in section 28 (employee benefits) of FRS 102 require the difference, between any liability for the contributions payable arising from an agreement to fund a deficit and the net defined benefit liability recognised when applying defined benefit accounting, to be recognised in ‘other comprehensive income’.
The amendments are effective for accounting periods beginning on or after 1 January 2020, with entities permitted to apply them earlier if they wish.
In an amendment to FRS 102, the Financial Reporting Council (FRC) has confirmed that the impact of employers transitioning from defined contribution accounting to defined benefit accounting is to be recognised in ‘other comprehensive income’ in the accounts.
The FRC had become aware that some multi-employer defined benefit plans were looking to provide, for the first time, sufficient information to enable participating employers to use defined benefit accounting. This would require employers to transition from defined contribution accounting to defined benefit accounting for these defined benefit plans.
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland did not clearly address the transition for multi-employer defined benefit plans. The FRC’s response is Amendments to FRS 102: Multi-employer defined benefit plans (bit.ly/2MfFXyX), setting new and explicit requirements for the transition from defined contribution accounting to defined benefit accounting when sufficient information becomes available.
The amendments in section 28 (employee benefits) of FRS 102 require the difference, between any liability for the contributions payable arising from an agreement to fund a deficit and the net defined benefit liability recognised when applying defined benefit accounting, to be recognised in ‘other comprehensive income’.
The amendments are effective for accounting periods beginning on or after 1 January 2020, with entities permitted to apply them earlier if they wish.
