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LP 2 Checking For Understanding

The document provides information about a defined benefit plan including current service cost, actual return on plan assets, interest income on plan assets, annual interest on pension liability, and past service cost during the year. It asks to calculate the total defined benefit cost. A second document provides similar information for a different company, including current service cost, actual return on plan assets, interest expense on projected benefit obligation, interest income on plan assets, loss on plan settlement, past service cost, and contributions to the plan. It asks to calculate the employee benefit expense, remeasurement gain/loss, total defined benefit cost, and prepaid/accrued benefit cost for the year.

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50 views4 pages

LP 2 Checking For Understanding

The document provides information about a defined benefit plan including current service cost, actual return on plan assets, interest income on plan assets, annual interest on pension liability, and past service cost during the year. It asks to calculate the total defined benefit cost. A second document provides similar information for a different company, including current service cost, actual return on plan assets, interest expense on projected benefit obligation, interest income on plan assets, loss on plan settlement, past service cost, and contributions to the plan. It asks to calculate the employee benefit expense, remeasurement gain/loss, total defined benefit cost, and prepaid/accrued benefit cost for the year.

Uploaded by

RIZLE SOGRADIEL
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Jellyace Company provided the following information pertaining to the defined benefit plan for the current year

Current service cost


Actual return on plan assets
Interest Income on plan assets
Annual interest on pension liability
Past Service Cost during the year

What is the total defined benefit cost?

SOLUTION:
Current service cost
Annual interest on pension liability
Past Service Cost during the year
Interest Income on plan assets
Defined Benefit Cost recognized in P/L

Difference between return on plan assets


and interest income on plan assets
(350,000 - 400,000 = -50,000)
Remeasurement gain / (loss) on OCI

Employee Benefit Expense (Recognized in P/L)


Remeasurement Gain / Loss (Recognized in OCI )
Total defined benefit cost

Brad Company provided the following information for the current year

Current service cost


Actual return on plan assets
Interest expense on PBO
Interest income on plan assets
Loss on plan settlement
Past service cost during the year
Contribution to the plan

1.) What is the employee benefit expense for the current year?
2.) What is the remeasurement gain or loss?
3.) What is the total defined benefit cost?
4.) What is the prepaid or accrued benefit cost for the year?

SOLUTION 1:
Current service cost
Interest expense on PBO
Past service cost during the year
Loss on plan settlement
Interest income on plan assets
Employee Benefit Expense

SOLUTION 2:
Actuarial gains and (losses)
Difference between return on plan assets
and interest income on plan assets
(810,000 - 350,000 = 460,000)
Remeasurement gain / (loss) on OCI

SOLUTION 3:
Employee Benefit Expense
Remeasurement Gain/(Loss)
Total defined benefit cost
lan for the current year

1,600,000.00
350,000.00
400,000.00
500,000.00
50,000.00

1,600,000.00
500,000.00
50,000.00
(400,000.00)
1,750,000.00

(50,000.00)

(50,000.00) Loss

1,750,000.00
(50,000.00)
1,800,000.00

520,000.00
810,000.00
590,000.00
350,000.00
240,000.00
360,000.00
1,500,000.00

520,000.00
590,000.00
360,000.00
240,000.00
(350,000.00)
1,360,000.00

(240,000.00)
460,000.00

220,000.00 Gain

1,360,000.00
(220,000.00)
1,140,000.00

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