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    Activity 1 Employee Benefits AK

    Uploaded by

    Ralph Rivera Santos
    This document provides information and questions about employee benefit plans, including defined benefit pension plans. It asks the reader to calculate various amounts related to defined benefit costs, obligations, assets, and returns for multiple companies based on data provided. It provides 20 multiple choice questions to calculate things like employee benefit expense, remeasurement gains and losses, defined benefit costs, accrued pension costs, liability for compensated absences, and amounts of actuarial losses and returns on plan assets.

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    © All Rights Reserved
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    Activity 1 Employee Benefits AK

    Uploaded by

    Ralph Rivera Santos
    10K views7 pages
    This document provides information and questions about employee benefit plans, including defined benefit pension plans. It asks the reader to calculate various amounts related to defined benefit costs, obligations, assets, and returns for multiple companies based on data provided. It provides 20 multiple choice questions to calculate things like employee benefit expense, remeasurement gains and losses, defined benefit costs, accrued pension costs, liability for compensated absences, and amounts of actuarial losses and returns on plan assets.

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    This document provides information and questions about employee benefit plans, including defined benefit pension plans. It asks the reader to calculate various amounts related to defined benefit costs, obligations, assets, and returns for multiple companies based on data provided. It provides 20 multiple choice questions to calculate things like employee benefit expense, remeasurement gains and losses, defined benefit costs, accrued pension costs, liability for compensated absences, and amounts of actuarial losses and returns on plan assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    10K views7 pages

    Activity 1 Employee Benefits AK

    Uploaded by

    Ralph Rivera Santos
    This document provides information and questions about employee benefit plans, including defined benefit pension plans. It asks the reader to calculate various amounts related to defined benefit costs, obligations, assets, and returns for multiple companies based on data provided. It provides 20 multiple choice questions to calculate things like employee benefit expense, remeasurement gains and losses, defined benefit costs, accrued pension costs, liability for compensated absences, and amounts of actuarial losses and returns on plan assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 7

    Activity #1-Employee Benefits (Postemployment Benefits & Other Employee Benefits)

    Instruction: Box and double rule your final answers. Final answers with any form of erasures or the like will be
    considered incorrect. Show your solutions in good form. Answers with no supporting computation will not also
    be considered. (2 points per requirement)

    Problem Solving:

    Problem 1-Sandra Company provided the following information for the current year:

    Current service cost 500,000


    Interest expense on PBO 600,000
    Interest income on plan assets 350,000

    Loss on plan settlement before normal retirement date 250,000

    Present value of benefit obligation settled in advance 950,000


    Past service cost during the year 300,000
    Actual return on plan assets 850,000
    Actuarial loss on PBO during the year 200,000
    Contribution to the plan 1,500,000
    Benefits paid to retirees 1,000,000
    Discount or settlement rate 10%

    1. What is the employee benefit expense for the current year? 1,300,000

    2. What amount of defined benefit cost should be recognized at year-end? 1,000,000

    3. What amount should be reported as accrued benefit cost at year-end? 2,000,000

    Page 1 of 7
    4. What is the fair value of plan assets at year-end? 3,650,000

    Problem 2-The following information is made available involving the defined benefit pension plan of Diwata
    Company for the year 2019:

    Fair value of plan asset, 1/1/2019 3,500,000

    Present value of benefit obligation 1/1/2019 3,750,000


    Current service cost 700,000
    Actual return on plan asset 420,000
    Contribution to the plan 600,000
    Benefits paid to the retirees 750,000

    Decrease in the present value of benefit obligation due to change in


    actuarial assumptions 100,000

    Present value of benefit obligation settled 250,000

    Settlement price of defined benefit obligation 200,000


    Discount rate 10%

    5. What amount of employee benefit cost should be reported in the profit or loss? 675,000

    6. What amount of defined benefit cost for the year 2019? 505,000

    7. What is the fair value of plan assets as of December 31, 2019? 3,570,000

    Page 2 of 7
    8. What is the present value of benefit obligation as of December 31, 2019? 3,725,000

    9. What is the balance of the prepaid or accrued pension as of December 31, 2019? 155,000

    Problem 3- Fortune Company, a medium enterprise has following information in relation to its defined benefit
    pension plan:

    Actual return on plan assets 230,000


    Benefits paid to retirees 200,000
    Contributions 345,000
    Present value of defined benefit obligation, Jan. 1, 2,500,000
    2019
    Present value of defined benefit obligation, Dec. 31, 2,870,000
    2019
    Fair value of plan asset, Jan. 1, 2019 2,400,000
    Current service cost 300,000
    Past service cost 40,000
    Discount rate 10%
    Remeasurement gain on obligation 20,000

    10. What amount of retirement benefit costs should be included in the profit or loss? 350,000

    11. What is the amount of remeasurement gain or loss related to the plan asset? (10,000)
    Page 3 of 7
    Problem 4-The following information is made available in relation to the defined benefit pension plan of
    Roadworthy Company for the year 2019:

    1-Jan 31-Dec
    Fair value of plan assets 5,200,000 6,000,000
    Present value of benefit obligation 4,000,000 4,200,000
    Surplus 1,200,000 1,800,000
    Asset Ceiling 400,000 600,000
    Effect of asset ceiling 800,000 1,200,000

    The following data are provided for the current year 2019:
    Current service cost P200,000
    Contribution to the plan 700,000
    Benefits paid 300,000
    Discount rate 10%

    12. What amount of employee benefits that should be reported in the profit or loss? 160,000

    13. What is the remeasurement loss due to the change in the effect of the asset ceiling? 320,000

    14. What amount of defined benefit cost should be recognized during 2019? 500,000

    Page 4 of 7
    Problem 5- The following information relates to the defined benefit pension plan for the Citywide Company for
    the year ending December 31, 2019:

    Present value of benefit obligation, January 1 6,900,000


    Present value of benefit obligation, December 31 7,793,500
    Fair value of plan assets, January 1 7,552,500
    Fair value of plan assets, December 31 8,347,500
    Employer contribution 637,500
    Benefits paid to retirees 585,000
    Settlement rate 10%
    Ceiling-January 1 300,000

    15. How much would be the net pension cost (employee benefit expense) for the year 2019? 758,500

    Page 5 of 7
    Problem 6- E Company provides an incentive compensation plan under which its president receives a bonus
    equal to 15% of E’s profit before deducting the bonus and tax. E’s profit after tax and after bonus for the year
    is P2,545,456. Income tax rate is 30%.

    16. How much is the bonus? 641,712

    Problem 7-Angela Company provided the following information pertaining to the defined benefit pension plan
    for the current year:

    Prepaid pension cost, January 1 20,000


    Current service cost 190,000
    Interest expense on PBO 380,000
    Interest income and actual return on plan assets 400,000
    Past service cost during the year 500,000
    Employer contribution 400,000

    17. What is the accrued pension cost at year-end? 250,000

    Problem 8-West Company determined that it has an obligation relating to employees’ rights to receive
    compensation for future absences attributed to employees’ services already rendered. The obligation relates
    to rights that vest, and payment of the compensation is probable. The entity’s obligations on December 31,
    2019 are reasonably estimated as follows:
    Vacation pay 1,200,000
    Sick pay 800,000

    18. In the December 31, 2019, statement of financial position, what amount should West Company report as
    liability for compensated absences? 2,000,000

    Page 6 of 7
    Problem 9-The following date related to the defined benefit plan of Bronson Company for the year ended
    December 31, 2019:

    Present value of benefit obligation, January 1, 2019 15,000,000

    Fair value of plan asset, January 1, 2019 14,000,000


    Contribution during the year 1,050,000
    Current service cost 800,000
    Benefits paid during the year 1,500,000
    Present value of benefit obligation, December 31,
    2019 17,410,000

    Fair value of plan asset, December 31, 2019 14,920,000


    Discount rate 6%
    Expected rate of return 5%

    19. What amount of the actuarial loss due to increase in obligation should be reported in the projected benefit
    obligation? 2,210,000

    20. What amount of the total actual return on the plan asset should be reported in other comprehensive
    income? 530,000

    Page 7 of 7

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