CENTER FORACCOUNTANCYREVIEW&TRAINING

E S T A B L I S H E D 2003
2ndFlr.,ManangoBldg., City Road., Centro East, Santiago City, Philippines; Mobile No.: 09108298588

PRACTICAL ACCOUNTING I
Jimmy I. Peru, MBM, MICB, CPA

EMPLOYEE BENEFITS

On January 1, 2013, Hectic Company provided the obligation of P 500,000. Contribution to the plan
following information in connection with defined amounted to P 2,000,000 and no benefits were paid
benefit plan: during the year. During the year, benefit obligation
with present value of P 1,000,000 was settled for P
Fair value of plan assets 10,000,000 800,000. The discount rate is 10% and the
Projected benefit obligation (13,000,000) remaining service period of covered employees is 10
Prepaid/ accrued benefit cost ( 3,000,000) years.

Transactions affecting the plan for the current year

are as follows: 6. What is the employee benefit expense for the
current year?
Current service cost 2,500,000 a. P 3,300,000 b. P 4,200,000
Past service cost- remaining vesting c. P 3,500,000 d. P 3,100,000
period of covered employees is 5 years 1,000,000
Contribution to the plan 3,500,000
Benefit paid to retirees 3,000,000 7. What amount should be reported as accrued
Actual return on plan assets 1,500,000 benefit cost on December 31, 2013?
Decrease in projected benefit obligation a. P 4,700,000 b. P 3,500,000
due to change in actuarial assumption 400,000 c. P 3,000,000 d. P 4,100,000
Settlement discount rate 10%
Expected return on plan assets 12% VJ Company provided the following information
during 2013:
1. What is the employee benefit expense for 2013? January 1 December 31
a. P 3,800,000 b. P 3,000,000 FV of plan assets 6,000,000 8,500,000
c. P 4,800,000 d. P 3,600,000 PBO 5,000,000 6,500,000
Prepaid cost 1,000,000 2,000,000
Asset ceiling 700,000 1,200,000
2. What is defined benefit cost for 2013? Effect on asset ceiling 300,000 800,000
a. P 3,800,000 b. P 4,700,000
c. P 2,900,000 d. P 3,500,000 During the year, the entity recognized current
service cost of P 1,000,000, actual return on plan
assets of P 900,000, and contribution plan of P
3. What is the fair value of plan assets on December 1,600,000. The discount rate is 10%.
31, 2013?
a. P 15,000,000 b. P 12,000,000
c. P 11,700,000 d. P 10,500,000 8. What is the employee benefit expense for the
current year?
a. P 930,000 b. P 900,000
4. What is the projected benefit obligation on c. P 800,000 d. P 870,000
December 31, 2013?
a. P 14,400,000 b. P 17,800,000
c. P 13,400,000 d. P 15,200,000 9. What is the net remeasurement gain or loss for
the current year?
a. P 300,000 gain b. P 470,000 loss
5. What amount should be reported on December c. P 770,000 gain d. P 170,000 loss
31, 2013 as accrued or prepaid benefit cost?
a. P 3,300,000 accrued Sarrah Company provided the following pension plan
b. P 3,300,000 prepaid information for the current year:
c. P 2,400,000 accrued
d. P 2,400,000 prepaid Projected benefit obligation- 01/01 3,500,000
Accumulated benefit obligation- 01/01 2,800,000
Hilarious Company provided the following Pension benefits paid during the year 250,000
information on January 1, 2013 prior to PAS 19R Past service cost during the year 500,000
Projected benefit obligation- 12/31 5,000,000
Fair value of plan assets 9,000,000 Accumulated benefit obligation- 12/31 3,900,000
Unamortized past service cost 1,500,000 Discount or settlement rate 10%
Projected benefit obligation 12,000,000
Unrecognized actuarial gain 1,000,000 10. What is the current service cost for the year?
a. P 1,400,000 b. P 1,070,000
On January 1, 2013, the entity adopted PAS 19R. c. P 900,000 d. P 570,000
During the year, the entity determined current
service cost of P 3,000,000, actual return on plan
assets of P 800,000 and increase in projected benefit

Vel June C. De Leon, CPA PA I Page 1