Mr Daritso the CEO of Njovu Limited has recently taken up an interest in financial
reporting. He is currently trying to understand lAS 19 Employee benefits. While in a
staff canteen, he handed you a roughly scribbled note in which he had drafted the
following quick questions on the subject.
a) Apparently there are two types of post -employment benefits. Please tell me
what these are?
b) Apparently there are essentially three account balances that constitute the
balance on the net defined benefit plan/liability line item in the statement of
financial position. What are these three accounts?
c) Mr Mvula from accounts department told me that all adjustments affecting the
net defined benefit plan asset/liability balance in the statement of financial
position are recognised in profit or loss. Is this correct?
d) What does measurement of a defined benefit plan comprise of?
e) Please explain to me what is meant by the so- called asset ceiling and please
could you also explain how it is measured
Required:
Write a memorandum to your CEO, briefly addressing each of his queries.
(15marks)
(Marks will be awarded for presentation of your memorandum)
1 Answer