Question

All of the following statements regarding the accounting for various forms of compensation plans under IFRS are true except:

a. IFRS does not recognize prior service costs on the balance sheet
b. for defined benefit plans, IFRS companies do not "recycle" actuarial gains and losses into income
c. IFRS does not separate pension plans into defined-contribution plans and defined-benefit plans
d. in order to dampen and in some cases fully eliminate the fluctuations in pension expenses, IFRS uses smoothing provisions.

Answer 1

Under IFRS, pension plans are not separated into defined-contribution and defined-benefit plans.

Step-by-step explanation:

The correct answer is c. IFRS does not separate pension plans into defined-contribution plans and defined-benefit plans.

Under IFRS, pension plans are classified as either defined-contribution plans or defined-benefit plans based on the economic substance of the plan.

However, IFRS does not require a separate presentation of these plans on the balance sheet or income statement.

IFRS also recognizes prior service costs and allows recycling of actuarial gains and losses into income for defined benefit plans. Additionally, IFRS uses smoothing provisions to dampen and eliminate fluctuations in pension expenses.