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Agastya Ltd.'s directors propose to recognise current service cost and net interest cost on a defined-benefit pension obligation in Other Comprehensive Income rather than profit or loss, so that bonus-linked operating profit is preserved. Identify the primary ethical concern.
ASelf-interest in pension-linked bonus is driving non-compliance with Ind AS 19, breaching integrity, objectivity and professional behaviour
BIt is an accounting policy choice under Ind AS 8 and only needs adequate disclosure
CIt is technically allowed under Ind AS 19 if applied consistently across years
DThe treatment is acceptable because remeasurement components are anyway recognised in OCI under Ind AS 19
Answer & Solution
Correct answer: A. Self-interest in pension-linked bonus is driving non-compliance with Ind AS 19, breaching integrity, objectivity and professional behaviour
Ind AS 19 requires current service cost, past service cost and net interest cost in P&L; only remeasurements go to OCI. There is no accounting-policy choice. The directors' bonus is the self-interest, and the proposal violates the fundamental principles of integrity, objectivity and professional behaviour.
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