IAS19

					                                                                Enter your company name here
                                                                                                                                                    £000
                                                                           Defined benefit schemes
                                                                                                                                 DR                   CR
                   1) Initial booking of the pension fund surplus/(deficit) as advised by the actuary

                                                                                                  Retained earnings           33,700
                                                                                                 Pension fund deficit                             33,700

                   On first adoption of IAS19 the pension fund surplus or defict will have to be booked onto the balance sheet. The above example
                   assumes that the opening pension deficit is £33.7m.

                   2) Related deferred tax on this deficit

                                                                                                  Deferred tax asset          10,110
                                                                                                  Retained earnings                               10,110

                   This entry may not be required if the company does not have or is not likely to have sufficient profits.

                   Once the initial asset or liability has been recognised, the next step is to start accounting for the regular payments or contributions
                   made by the company into the pension fund.

                   3) Regular employer's pension contributions made by the company

                                                                  Defined benefit pensions account - balance sheet             2,500
                                                                                                             Cash                                   2,500

                   The company will normally deduct a % of the employees' salary and itself make a contribution towards the pension scheme on a
                   regular basis. The company will pay these amounts to the pension fund which will then invest the funds.

                   At least once a year the acutary will calculate the pension scheme's assets and liabilities (obligations) together with the
                   income/expense. This information is used to book the following entries into the books of the company and for disclosure in the
                   accounts. The actuary will calculate these items:
                                         - Current and past service costs of employing staff
                                            - Interest on the pension scheme's obligations
                                            - The expected return on the scheme's assets
                   These amounts are the 'expenses recognised in the income statement'. See the disclosure example of where these items are
                   shown in the income statement. The booking entries follow.

                   4) Booking the net expense to be recognised in the income statement

                                                                   Current service costs - COS/Distribution/Admin              5,100
                                                                    Interest on scheme obligations - Finance costs             4,600
                                                                  Expected return on plan assets - Finance income                                   6,300
                                                                  Defined benefit pensions account - balance sheet                                  3,400

                   Booking the pension scheme charge in the income statement from information received from the actuary. Past service costs are
                   recognised in the income statement.

                   Under IAS19 defined benefit scheme assets are to be recognised in the balance sheet at their fair values (market values) while the
                   present value of the scheme obligations are recognised in the balance sheet giving a net surplus/(deficit). These calculations are
                   complex and are always provided by the actuary. The booking of these is now shown below:

                   5) Booking of the actuarial gain/loss in the company's books.

                                          Defined benefit pensions account - balance sheet with the actuarial gain             6,400
                                          Defined benefit pensions account - balance sheet with the actuarial loss                                17,900
                                                                                  Retained earnings - net amount              11,500

                   Booking the pension scheme actuarial gain/(loss) received from the actuary.

                   6) Booking the related deferred tax on these actarial gains/losses, but see company's tax position above.

                                                                                      Retained earnings - net amount                                3,450
                                                                                                  Deferred tax asset           3,450

                   Being the deferred tax relating to the net liability of £11.5m.

                   Finally the pension scheme will pay out benefits to its members. The company does not have to record these in its books as its
                   contractual obligation has been satisfied once it has made its own (employer's) contribution. However, for disclosure the company
                   has to show how the (employees') contributions have been used to pay the pension benefits (see attached example).


                                                                                     SUMMARY

                                    Income statement charge/(credit) - note the special lines used                             3,400

                      Net pension surplus / (deficit) - balance on the DB pensions account in the balance sheet          (46,100)

                                                                  Cash                                                        (2,500)

                                                           Retained earnings                                                  31,640

                                                           Deferred tax asset                                                 13,560

                   The above example assumes that the company has never accounted for any pension scheme and has no prior accounting balances
                   in this respect. The only final adjustment is to remove all income statement balances relating to the defined benefit pension scheme
                   and to remove all balances in the balance sheet relating to the DB schemes. An incremental approach is acceptable so long as the
                   final amounts agree to those shown above.
                   Blue cells = input cells

Prepared By: Mike Agate
7/9/2011                                                                                                                                                     6:45 AM
 Adjustments required to properly account for DB schemes
 DR/(CR)
 IAS19 Only!                UKGAAP                 Opening DB pension                                     IFRS
 £m                           Current Removing DB pension numbers            DT on          Total         Final
                                TB       ukgaap     deficit   from          actuarial       IFRS           TB
                            "(extract)" P&L charge incl DT   actuary          loss           Adj        (extract)
 Income statement

 Cost of sales                 327.8       (4.7)                     5.1                        0.4        328.2

 Finance cost                   10.2                                 4.6                        4.6         14.8

 Finance income                  (1.8)                              (6.3)                      (6.3)         (8.1)

 Other items                  (408.0)                                                                     (408.0)

 (Profit)/loss for period      (71.8)      (4.7)              -      3.4                -      (1.3)       (73.1)

 Balance sheet

 Assets/(liabilities)
 DT asset                        4.1                   10.1                      1.3          11.4          15.5

 SSAP24 debtor/(creditor)        2.5                                (2.5)                      (2.5)                -

 DB Pension deficit                                    (33.7)       (5.3)                     (39.0)       (39.0)

 Other                          65.2                                                                -       65.2

 Equity
 (Profit)/loss for period      (71.8)      (4.7)              -      3.4                -      (1.3)       (73.1)

 Retained earnings                          4.7        23.6                                   28.3          28.3

 Net Actuarial loss                                                  4.4                        4.4          4.4

 DT on actuarial loss                                                            (1.3)         (1.3)         (1.3)


                                     -         -              -         -               -       0.0                 -

 This example assumes that the company had previously accounted for defined benefit schemes under UK
 GAAP (ie the scheme surplus/(deficit) was not recognised in the balance sheet) and now does so under IFRS
 (IAS19).
 The IAS19 numbers are the same as the previous example and have been highlighted in grey.




Prepared By: Mike Agate
7/9/2011                                                                                                  6:45 AM
                                           Enter your company name here
                                                                                                                           £m
                                          Defined benefit schemes - Example / Disclosure
                                                                                                          Dr / (Cr)
                                                                                           CY                         PY
 Changes in the PV of DB obligations
 Opening DB (obligation) *                                                                 (191.1)                    (173.8)

 Currency realignment                                                                                 -

 Service (cost) *                                                                            (5.1)                      (4.1)

 Interest (cost) *                                                                           (4.6)                      (4.4)

 Actuarial gains / (losses) *                                                                   1.9                     (8.5)

 Obligations transferred/acquired on sale/purchase of subsidiary                                      -

 Benefits paid less employee contributions *                                                    2.5                     (0.3)

 Closing defined benefit (obligation) *                                                    (196.4)                    (191.1)

 Changes in the FV of plan assets

 Opening fair value of plan assets *                                                       157.4                      129.6

 Currency realignment

 Expected return *                                                                              5.3                        4.2

 Actuarial gains / (losses) *                                                                (5.4)                         6.3

 Contributions received                                                                         2.6                    17.0

 Benefits paid less employee contributions *                                                 (2.5)                         0.3

 Closing fair value of plan assets *                                                       157.4                      157.4


 NET PENSION SURPLUS/(DEFICIT)                                                              (39.0)                     (33.7)

 Actuarial gains/(losses) taken to SORIE                                                     (3.5)                      (2.2)

 Expense recognised in the income statement

 Current service costs *                                                                        5.1                        4.1

 Interest on obligation *                                                                       4.6                        4.4

 Expected return on plan assets *                                                            (5.3)                      (4.2)

 Past service cost *                                                                                  -                          -

                                                                                                4.4                        4.3

 The expense is recognised in the following line items in the income statement:

 Cost of sales                                                                                        -                          -

 Distribution expenses                                                                                -                          -

 Administration expenses (Default)                                                              5.1                        4.1

 Finance income                                                                              (0.7)                               -

 Finance cost                                                                                         -                    0.2

                                                                                                4.4                        4.3
 * Calculated by actuary
Prepared By: Mike Agate
7/9/2011
                                                                                                                      6:45 AM