Actuarial Gains and Losses: the Choice of the Accounting Method

ABSTRACT IAS 19: Employee Benefits (2004) enables a choice between three accounting methods of recognising actuarial gains and losses: profit or loss, equity and corridor methods. The objective of this paper is to identify the accounting method of actuarial gains and losses followed by companies after the mandatory adoption of International Accounting Standards Board (IASB) standards. Information was collected about that accounting method adopted by 523 European companies, in the first year of mandatory IASB standards adoption. It was found that most of European companies included in the sample adopted the corridor method or the equity recognition method. The results also show that the equity recognition method is more used in the United Kingdom (UK) and Ireland and the corridor method is more used by financial companies.