Since the global financial crisis, falling bond and equity markets have led to reporting

entities such as Rio Tinto, Qantas, Westpac and AMP disclosing significant multi-million

dollar deficits on the various defined benefit superannuation schemes they sponsor for

their employees.

Required

(a) Your friend has commented that the deficits reported in the statements of financial

position of sponsoring employers are based on the accounting disclosures required

by AASB 119. To what requirements of AASB 119 is your friend referring? Explain.

(b) Your friend has also commented that a reported net defined benefit obligation

does not necessarily mean that the defined benefit plan’s assets do not cover its

current defined benefit obligations. Do you agree with this statement? Explain.