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How Actuarial Assumptions Affect Defined Benefit Obligations under International Financial Reporting Standards? Evidence from Korea
Author(s) -
Cho Kwanghee,
Kim YoungJun,
Yoon Sang Kyoo
Publication year - 2014
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/auar.12051
Subject(s) - salary , pension , affect (linguistics) , accounting , business , actuarial science , international financial reporting standards , economics , finance , psychology , communication , market economy
This paper examines how actuarial assumptions affect defined benefit obligations (DBOs) under the newly adopted Korean International Financial Reporting Standards (K‐IFRS) with the help of evaluation reports provided by the pension provider. The results show that there is no significant discrepancy between the DBOs estimated on a going concern basis under K‐IFRS, and the retirement benefits estimated on a non‐going concern basis under traditional K‐GAAP. Also, the rate of salary increase, average salary and average years of service have a statistically significant positive impact on DBOs, irrespective of the adoption of K‐IFRS.