In July 2007, the International Accounting Standards Board (IASB) issued IFRIC 14, IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, toprovide general guidance on how to assess the limit in International Accounting Standard (IAS) 19, Employee Benefits, on the amount of the surplus that can be recognized as an asset. IFRIC 14 also explains how the pension’s asset or liability may be affected when there is a statutory or contractual minimum funding requirement.
As a result of this Interpretation, in some circumstances entities were not permitted to recognize as an asset some prepayments for minimum funding contributions. To correct this unintended consequence of IFRIC 14, the IASB recently published Prepayments of a Minimum Funding Requirement - Amendments to IFRIC 14. This amendment applies only in those situations where an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset.
The amendment is effective date for annual periods beginning on or after January 1, 2011, with early adoption permitted. The amendment must be applied retrospectively to the earliest period presented. |
