Lesson 8 of 8 · All lessons in this module
- What a lease is and how it is classifiedVideo lesson
- Lessee accounting: the IFRS model and US GAAP finance leasesVideo lesson
- US GAAP operating leases and the effect on ratiosVideo lesson
- Lessor accounting: finance versus operating leases
- Defined contribution and defined benefit pension plansVideo lesson
- Share-based compensation: stock grants, options and SARsVideo lesson
- Presentation and disclosure: leases, pensions and share-based pay
- Integrated cases: reading the pension, lease and share-based pay notes
Lesson 8 of 8 · 17 min
Integrated cases: reading the pension, lease and share-based pay notes
Exam vignettes on long-term liabilities and equity give you the notes, not the answers: sort each pension line into profit, other comprehensive income or cash, turn a lease maturity table into a liability and a split, and roll an option table forward.
In short
- Under IFRS a pension note's lines go to three places: profit or loss (service cost and net interest), OCI (remeasurements, never recycled) and cash (contributions, benefits paid).
- The balance sheet shows each plan's funded status: DBO minus plan assets, a surplus capped by the limit on asset recognition, and an unfunded plan's DBO in full.
- Lease liability = total undiscounted payments − imputed interest; next year's interest is about liability × the weighted-average discount rate, and the rest of the payment is principal.
- An option table is a roll-forward: opening + granted − exercised − forfeited − expired = closing. Unrecognised compensation cost divided by its average period approximates the annual expense.
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