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    Unit Number/ Heading: Intermediate Accounting Ii (Ae 16) Learning Material: Postemployment Benefit

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    Sitti Ayesha Hasiman
    The document provides examples of accounting problems related to defined benefit pension plans. It includes information about projected benefit obligations, service costs, returns on plan assets, and remeasurement gains and losses. The problems calculate unknown values based on financial data provided, such as contributions, benefits paid, discount rates, and beginning and ending account balances. Sample computations are shown for determining values like service costs, returns on assets, and fair values using common defined benefit accounting formulas and approaches.

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    Unit Number/ Heading: Intermediate Accounting Ii (Ae 16) Learning Material: Postemployment Benefit

    Uploaded by

    Sitti Ayesha Hasiman
    574 views3 pages
    The document provides examples of accounting problems related to defined benefit pension plans. It includes information about projected benefit obligations, service costs, returns on plan assets, and remeasurement gains and losses. The problems calculate unknown values based on financial data provided, such as contributions, benefits paid, discount rates, and beginning and ending account balances. Sample computations are shown for determining values like service costs, returns on assets, and fair values using common defined benefit accounting formulas and approaches.

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    The document provides examples of accounting problems related to defined benefit pension plans. It includes information about projected benefit obligations, service costs, returns on plan assets, and remeasurement gains and losses. The problems calculate unknown values based on financial data provided, such as contributions, benefits paid, discount rates, and beginning and ending account balances. Sample computations are shown for determining values like service costs, returns on assets, and fair values using common defined benefit accounting formulas and approaches.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    574 views3 pages

    Unit Number/ Heading: Intermediate Accounting Ii (Ae 16) Learning Material: Postemployment Benefit

    Uploaded by

    Sitti Ayesha Hasiman
    The document provides examples of accounting problems related to defined benefit pension plans. It includes information about projected benefit obligations, service costs, returns on plan assets, and remeasurement gains and losses. The problems calculate unknown values based on financial data provided, such as contributions, benefits paid, discount rates, and beginning and ending account balances. Sample computations are shown for determining values like service costs, returns on assets, and fair values using common defined benefit accounting formulas and approaches.

    Copyright:

    © All Rights Reserved
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    of 3

    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 P7,200,000


    Assumed discount rate 10%
    Service cost P1,800,000
    Pension benefits paid 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 P3,000,000


    PBO – December 31 P3,500,000
    Contribution to the plan P 600,000
    Benefits paid P 500,000
    Discount rate 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 P 135,000


    PBO at year-end P2,160,000
    Interest expense on PBO 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 P3,500,000


    FVPA, ending P5,250,000
    Employer contributions P1,100,000
    Benefits paid 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 P 600,000


    Contribution to the fund P 700,000
    Actual return on plan assets P 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 d. P8,850,000
    **P8,750,000 + P700,000 + P950,000 – P600,000 = P9,800,000

    Problem 6:
    Caticlan Company provided the following information:

    FVPA – January 1 P3,500,000


    FVPA – December 31 P3,900,000
    Market-related value of plan assets – Jan 1 P2,800,000
    Market-related value of plan assets – Dec 31 P2,900,000
    Contributions to the plan P 280,000

    2
    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 FVPA P9,000,000


    During year Pension benefits paid P 700,000
    Contribution to the plan P1,000,000
    Expected return on plan assets P1,200,000
    Interest income on plan assets P 900,000
    December 31 FVPA 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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