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CA Intermediate · Advanced Accounting · AS 15 Employee Benefits

Narmada Steels Ltd. has a defined benefit plan. On 31 March 2026: present value of defined benefit obligation Rs 90,00,000; fair value of plan assets Rs 78,00,000; unrecognised past service cost (non-vested benefits) Rs 3,00,000; unrecognised actuarial gains: none. The company's plan has no other adjustments. What amount of net defined benefit liability is recognised in the balance sheet under AS 15?

The liability recognised is Rs 9,00,000. Under AS 15 it is the present value of the obligation, less unrecognised past service cost, less fair value of plan assets: 90,00,000 minus 3,00,000 minus 78,00,000. Unrecognised past service cost is deducted because it has not yet been recognised.

  1. ARs 12,00,000
  2. BRs 9,00,000Correct
  3. CRs 15,00,000
  4. DRs 3,00,000

Explanation

Liability = present value of obligation - unrecognised past service cost - fair value of plan assets = 90,00,000 - 3,00,000 - 78,00,000 = Rs 9,00,000. Rs 12,00,000 ignores the unrecognised past service cost, which is not yet recognised in the balance sheet. Adding it, giving Rs 15,00,000, is a wrong sign.

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