104 Accounting Quiz

1. Post-employment benefits include.
Pension
2. Saionra Co. presented to you the following:
January 1 December 31
Fair value of Plan Assets 7,875,000 8,775,000
Market related value of the plan assets 6,300,00 6,525,000
Contribution to the plan 630,000
Benefits paid to retirees 562,500
> What is the actual return on the plan assets for the current year? 832,500
3. Saionara Co. reported the following at the end of the previous year:
Fair value of Plan Asset 11,725,000
Projected Benefit Obligation 13,300,000
The company provided the following information during the current year:
Current service cost 2,537,500
Past service cost 525,000
Actual return on plan assets 875,000
Contribution to the plan 2,625,000
Benefits paid to retirees 1,400,000
Discount rate 10%
a. What is the employee benefit expense? 3,220,000

b. What is the remeasurement gain or loss on plan assets? (Indicate whether gain or
loss after the amount i.e. 5,000 gain) 297,500 loss
c. What is the fair value of the plan assets at the end of the current year? 13,825,000
d. What is the accrued benefit cost at the end of the current year? 2,467,500
4. Waileesud Co. provided the following data: Fair value of plan asset at start of year, P4,375,000;
Pension benefits paid, P300,000; Contributions made to the fund, P350,000; Actual return on plan
assets, P475,000. What is the fair value of the plan asset on December 31? 4,900,000
5. A pension liability is reported when - The defined benefit obligation exceeds the fair value of plan
assets.
6. Saionra Co. had a noncontributory defined benefit pension plan. The entity received the projected
benefit obligation report from the independent actuary at year-end. Pension benefits paid, P405,000;
PBO on December 31, P6,480,000; Interest expense, P360,000; Discount rate, 8%. What is the
projected benefit obligation on January 1? 4,500,000
7. In accordance with the revised PAS 19, which of the following is reported in profit or loss?
Interest on the effect of asset ceiling
8. What is the relationship between the amount funded and the amount reported for defined benefit
cost? Defined benefit-cost may be more than, equal to, or less than the amount funded.
9. Vested benefits - Are those that the employee is entitled to receive even if fired./ Are not
contingent upon additional service under the plan./ Usually require a certain minimum number of
years of service.
10. In a defined benefit plan, a formula is used to - Define the benefits that the employee will receive
at the date of retirement.
11. A pension' asset is reported when - Plans assets at fair value exceed the defined benefit
obligation.
12. Employee benefits are - All forms of consideration given by an entity in exchange for service
rendered by employees or for the termination of employment.
13. Which statement is incorrect regarding post-employment benefit plans? Post-employment
benefit plans are arrangements whereby an entity provides post-employment benefits./
Post-employment benefit plans are classified as either defined contribution plans or defined benefit
plans, depending on the economic substance of the plan as derived from its principal terms and
conditions./ An entity applies PAS 19 to all post-employment benefit plans whether or not they
involve the establishment of a separate entity to receive contributions and to pay benefits. (all true)
14. The present value of pension benefits accrued to date using assumptions as to future
compensation level is the - Projected benefit obligation
15. The interest on the projected benefit obligation - Reflects the rate at which retirement benefits
could be effectively settled.
16. The components of defined benefit cost include - Interest (net) on the net defined benefit
liability (asset) in profit or loss./ Remeasurements of the net defined benefit liability (asset) in other
comprehensive income./ Service cost in profit or loss. (all true)
17. Which of the following is a characteristic of a defined benefit plan? - If actuarial or investment
experience are worse than expected, the entity's obligation may be increased.
18. In the calculation of pension expense under a defined benefit plan, which component will not be
included? - Excess of projected benefit obligation over the fair value of the plan assets
19. The projected unit credit method - Sees each period of service as giving rise to an additional unit
of benefit entitlement./ Measures each unit of benefit entitlement separately to build up the final
obligation. (all true)
20. Which measure requires the use of future salaries in the computation of benefit obligation?
Projected benefit obligation
21. Which of the following is a characteristic of a defined contribution plan? The entity's legal or
constructive obligation is limited to the amount that it agrees to contribute to the fund./ Actuarial
risk (that benefits will be less than expected) and investment risk (that assets invested will be
insufficient to meet expected benefits) fall, in substance, on the employee./ The amount of the
post-employment benefits received by the employee is determined by the amount of contributions
paid by an entity to a post-employment benefit plan or to an insurance company, together with
investment returns arising from the contributions. (all true)
22. Which of the following is a characteristic of defined contribution plans? The employer's
obligation is satisfied by making the appropriate amount of periodic contribution.
23. The vested benefits in a pension plan represent - Benefits that are not contingent on the
employee's continuing in the service of the employer.
24. A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for
each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent
(compound) each year. The discount rate used is 10 per cent per year. The entity does not fund its
obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5. The
increase in the present value of the defined benefit obligation resulting from employee service in year
2 (current service cost) is - 98
25. Interest cost included in the net pension cost recognized by an employer sponsoring a defined
benefit plan represents the - Increase in the projected benefit obligation due to the passage of time.
26. A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for
each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent
(compound) each year. The discount rate used is 10 per cent per year. The entity does not fund its
obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5. The
defined benefit liability (deficit) at the end of the second year is - 196
27. Saionaini Company provided the following information to the pension plan for the current year:
Projected benefit obligation on January 1, P14,400,000; Service cost, P3,600,000; Pension benefits
paid, P3,000,000; Discount rate is 10%. If no change in actuarial estimate occurred in the current
year, what is the projected benefit obligation on December 31? 16,440,000

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1. Post-employment benefits include.

Fair value of Plan Assets 7,875,000 8,775,000

Market related value of the plan assets 6,300,00 6,525,000

Contribution to the plan 630,000

Benefits paid to retirees 562,500

Fair value of Plan Asset 11,725,000

Projected Benefit Obligation 13,300,000

Current service cost 2,537,500

Past service cost 525,000

Actual return on plan assets 875,000

Contribution to the plan 2,625,000

Benefits paid to retirees 1,400,000

Discount rate 10%

a. What is the employee benefit expense? 3,220,000

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