Magritte Inc. provides a defined benefit pension plan for its employees (for which the corporation uses IFRS). At December 31, 2020, the fair value of the plan assets is less than the defined benefit obligation. In its statement of financial position at December 31, 2020, Magritte should report a net defined benefit liability/asset of the

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When the fair value of the plan assets is less than the defined benefit obligation, a company should report a net defined benefit liability, which is the excess of the defined benefit obligation over the fair value of the plan assets. This is because the company has a contractual obligation to pay employee benefits that it may not be able to fully fund with the plan assets it holds. Therefore, the liability represents the amount of additional funding required to meet the plan obligations.