HSBC 2006 Annual Report Download - page 424

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Note 47
422
Disclosures in 2005
2005
US$m
Funded status as per IFRSs balance sheet (Note 7) .................................................................................................... (3,941)
Unrecognised net actuarial loss .................................................................................................................................. 4,756
Unrecognised prior service cost .................................................................................................................................. 35
Accrued pension cost .................................................................................................................................................. 850
Additional minimum liability ..................................................................................................................................... (3,206)
Net amount recognised under US GAAP ................................................................................................................... (2,356)
Amounts recognised under US GAAP in the balance sheet consist of:
– prepaid benefit cost ............................................................................................................................................. 1,434
– accrued benefit liability ...................................................................................................................................... (584)
– additional minimum liability .............................................................................................................................. (3,206)
(2,356)
US GAAP adjustment
Amount recognised under US GAAP ......................................................................................................................... (2,356)
Amounts recognised for these schemes under IFRSs ................................................................................................. (3,941)
1,585
In 2005, plans with an aggregated accumulated benefit obligation of US$21,098 million and assets with an
aggregated fair value of US$18,444 million had an accumulated benefit obligation in excess of plan assets. Plans
with an aggregated projected benefit obligation of US$22,595 million and assets with an aggregated fair value of
US$18,795 million had a projected benefit obligation in excess of plan assets.
The projected benefit obligations at 31 December 2005 for HSBC’s main pension plans have been calculated
using the same financial assumptions as detailed in Note 7.
The accumulated benefit obligation in respect of the above schemes was:
2005
US$m
HSBC Bank (UK) Pension Scheme ............................................................................................................................ 19,709
Other schemes ............................................................................................................................................................. 5,241
The projected benefit obligations at 31 December 2006 and 2005 for HSBC’s main post-retirement healthcare
plans have been calculated using the same financial assumptions as detailed in Note 7.
(b) Goodwill
Goodwill arises on the acquisition of subsidiaries, investments in associates and interests in joint ventures when
the cost of acquisition exceeds the fair value of HSBC’s share of the identifiable assets, liabilities and contingent
liabilities acquired.
Under IFRSs (and before them, UK GAAP), goodwill arising on acquisitions made on or after 1 January 1998 is
included in the balance sheet in ‘Goodwill and intangible assets’ in respect of subsidiary undertakings, and in
‘Interests in associates and joint ventures’ in respect of associates and joint ventures. Capitalised goodwill was
amortised over its estimated useful life on a straight-line basis until the adoption of IFRSs on 1 January 2004,
since then it is not amortised but is subject to annual impairment testing. Goodwill arising on acquisitions prior
to 1 January 1998 was charged against reserves in the year of acquisition. This goodwill was not reinstated on
the balance sheet upon adoption of IFRSs.
Under US GAAP, goodwill on acquisitions made before 1 July 2001, including those made before 1 January
1998, would have been capitalised and amortised over its useful economic life. Goodwill on acquisitions made
after 1 July 2001 is capitalised but not amortised, and is subject to annual impairment testing. Goodwill on
acquisitions made before 1 July 2001 ceased to be amortised on 1 January 2002 and is subject to annual
impairment testing.
At 31 December 2006, the cost of goodwill arising on the acquisition of subsidiaries on a US GAAP basis was
US$37,670 million (2005: US$34,147 million; 2004: US$36,084 million) and the accumulated amortisation of
goodwill was US$3,952 million (2005: US$3,873 million; 2004: US$4,385 million).