Title | Defined benefit plan (Exercises with answers) |
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Course | Accounting |
Institution | Cagayan State University |
Pages | 3 |
File Size | 118.5 KB |
File Type | |
Total Downloads | 100 |
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1INTERMEDIATE ACCOUNTING II (AE 16)LEARNING MATERIALUNIT NUMBER/ HEADING: POSTEMPLOYMENT BENEFIT –DEFINED BENEFIT PLAN- ACCOUNTING PROCEDURESFeedbackProblem 1: Sada Company provided the following information pertaining to a pension plan for the current year:Actuarial value of PBO, beginning P7,200, ...
INTERMEDIATE ACCOUNTING II (AE 16) LEARNING MATERIAL UNIT NUMBER/ HEADING: POSTEMPLOYMENT BENEFIT – DEFINED BENEFIT PLAN- ACCOUNTING PROCEDURES Feedback Problem 1: Sada Company provided the following information pertaining to a pension plan for the current year: Actuarial value of PBO, beginning Assumed discount rate Service cost Pension benefits paid
P7,200,000 10% P1,800,000 P1,500,000
No change in actuarial estimate occurred during the current year. What is the projected benefit obligation at year-end? a. P6,240,000 b. P7,500,000 c. P7,920,000 d. P8,220,000 **P7,200,000 + P720,000 + P1,800,000 – P1,500,000 = P8,220,000
Problem 2: Daimon Company provided the following information with respect to the defined benefit plan for the current year: PBO – January 1 PBO – December 31 Contribution to the plan Benefits paid Discount rate
P3,000,000 P3,500,000 P 600,000 P 500,000 10%
What is the current service cost for the current year? a. P700,000 b. P600,000 c. P500,000
d. P300,000
**P3,000,000 + P700,000 + (P3,000,000 x 10%) – P500,000 = P3,500,000 squeeze computation
Problem 3: Rabiya Company received the following report from the independent actuary in relation to a defined benefit pension plan at year-end: Pension benefits paid PBO at year-end Interest expense on PBO
P 135,000 P2,160,000 P 120,000 1
Discount rate
8%
What is the current service cost for the current year? a. P675,000 b. P810,000 c. P540,000
d. P255,000
**(P120,000/8%) + P675,000 + P120,000 – P135,000 = P2,160,000 squeeze computation
Problem 4: Gail Company provided the following information pertaining to defined benefit plan for the current year: FVPA, beginning FVPA, ending Employer contributions Benefits paid
P3,500,000 P5,250,000 P1,100,000 P 880,000
What was the actual return on plan assets? **P3,500,000 + P1,500,000 + P1,100,000 – P850,000 = P5,250,000 squeeze computation
Problem 5: Manaoag Company maintains a fund to cover a pension plan with the following data for the current year: January 1
FVPA P8,750,000 Market-related value of the pension fund (5-year weighted average) P7,150,000
During year
Pension benefits paid Contribution to the fund Actual return on plan assets
P P P
600,000 700,000 950,000
What is the fair value of plan assets on December 31? a. P8,200,000 b. P9,800,000 c. P7,250,000 **P8,750,000 + P700,000 + P950,000 – P600,000 = P9,800,000
Problem 6: Caticlan Company provided the following information: FVPA – January 1 FVPA – December 31 Market-related value of plan assets – Jan 1 Market-related value of plan assets – Dec 31 Contributions to the plan 2
P3,500,000 P3,900,000 P2,800,000 P2,900,000 P 280,000
d. P8,850,000
Benefits paid
P 250,000
What is the actual return on plan assets for the current year? a. P400,000 b. P370,000 c. P430,000 d. P100,000 **P3,500,000 + P370,000 + P280,000 – P250,000 = P3,900,000 squeeze computation
Problem 7: Marion Company provided the following data for the current year: January 1 During year
December 31
FVPA Pension benefits paid Contribution to the plan Expected return on plan assets Interest income on plan assets FVPA
P9,000,000 P 700,000 P1,000,000 P1,200,000 P 900,000 P9,900,000
What is the remeasurement gain or loss on plan assets for the current year? a. P300,000 gain c. P600,000 gain b. P300,000 loss d. P600,000 loss **P1,200,000 – P900,000 = P300,000 gain
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