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    Tyra Joyce Revadavia
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    CPAR B87 FAR

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    CPAR B87 FAR

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    2K views10 pages

    Untitled 9

    Uploaded by

    Tyra Joyce Revadavia
    CPAR B87 FAR

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    of 10
    FINANCIAL ACCOUNTING AND REPORTING VALIX/SIY/VALIWESCALA/SANTOS/DELA CRUZ Components of defined benefit cost 1, Service cost: a. Current service cost b. Past service cost ©. Gain or loss on plan settlement before normal retirement date 2, Net interest expense (income): a. Interest expense on PBO at the beginning bb. Interest income on FVPA at the beginning ©. Interest expense on effect of asset ceiling at the beginning 3. Remeasurements: a, Remeasurement of PBO b. Remeasurement of plan assets c. Remeasurement of effect of asset ceiling 4, Service cost and net interest are included in profit or loss as component of employee benefit expense, 5, Remeasurements are included in other comprehensive income and subsequently reclassified to retained earnings. 6. Remeasurement of PBO: a. If the PBO has increased or the actual obligation is higher than the estimated amount, there is an actuarial loss. b. Ifthe PBO has decreased or the actual obligation is lower than the estimated amount, there is an actuarial gain, 7. Remeasurement of plan assets: a. If the actual return on plan asset is higher than the interest income on FVPA, the difference is a remeasurement gain. b. If the actual return or plan asset is lower than the interest income on FVPA, the difference is a remeasurement loss. 8. Remeasurement of effect of asset ceiling: The effect of the asset ceiling is the excess of prepaid benefit cost or surplus over the asset ceiling. ‘The asset ceiling is the present value of refund of contribution from the retirement plan or reduction in future contribution to the plan, a. Any inerease in the effect of asset ceiling is a remeasurement loss minus interest expense on the effect of asset ceiling. b. Any decrease in the effect of asset ceiling is remeasurement gain plus interest expense on the effect of asset ceiling, 9.. Ifthe contribution to the plan is more than the defined benefit cost, the difference is prepaid benefit cost during the year. 10. If the contribution to the plan is less than the defined benefit cost, the difference is accrued benefit cost during the year. idiaild iat employee Benefits tentribuOne © befned cormisuten — —— pee ~ pense conieuhon Contoutcn et Ate ie as Ire Bench Variable ane Dene! bot Ne rest Ly oefined Benefit Plan, = ——»achuial ascunnpiont emeccuementt ~ OE ~ reciaifiale te oy vanle RE Benehit ~ fixed Sera co Netinee cot 7 ; ent Cott + (ner bypaue_on PbO. Beg ae + Ines ne FOR] = {sete uw Lagat) lojerert on Fhe tg pies Ga on ceerent en om Seton Init income > onaueh rake x AVAR Joey Remeaaureneny, G[L om m0 46 4b Injerert pene > Muvount rate x PRO. beg Remeacuremest Gf on PA ~ ketal hurry inf riome ~ Gain % Aaa chan ve 1 famedfeat on - ven - Ro chonge 1 ERL, —¥ Gain vp ¢ PO Peo + pred fairvane of Ban Assets CrvPA) foirvawe of Plan Arvck (FUME) Beg - Bolonce, beuehts paid bey: Palance | Benefit baud Interen; acome | Cettement pric of DBO Actuat Return) | Seffner ce Cearputon Hevemuenes at Cp in BRO * Renee en om PA K tnd pan Se tolave 2 échygl Ketan *« Interes come 60 PR xx, Dehned beset Cost - PIL Gain [Lost 4 [00/) ene Conc is | Interest come tn FPR beg a ie in on sctemest oF OOD Prijected Deneht Olehgahm Past Sone Cot 44100 Rion Benepe ford Beg Palace of 080 PU of peosettied | Curent fewice cost ‘nt. crtence Deen ioe ce | fs Sen ot TE ‘oon aa | jee pene my 009 \ssumphon < ne Increase in D60 due to conga ar i iceurnption #6 Gain Lace Setfernent x” ind. Balance FINANCIAL ACCOUNTING AND REPORTING _ YALIX/SIY/VALIX/ESCALA/SANTOS/DELA CRUZ 1. At the beginning of current year, an entity provided the following information in connection with a defined benefit plan: Fair value of plan assets s 10,000,000 Projected benefit obligation 13,000.04 Prepaid /accrued benefit cost (3,000,000) ‘The entity revealed the following transactions affecting the plan for the current year: Current service cost 2,500,000 Past service cost — remaining vesting period of covered employees is 5 years 1,200,000 Contribution to the plan 3,500,000 Benefits paid to retirees 3,000,000 Actual return on plan assets 4 1,500,000 Decrease in projected benefit obligation due to change in actuarial assumptions 400,000 Discount rate aa Expected retum on plan assets 12% 1. What is the employee benefit expense for the current ea 4,000,000 © Cuaron Service Cost asm Botte Rast Senne SO pea c. 5,000,000 Iniren bxgene =Pbo (husio#) — HoA.eh d. 5,200,000 Inerest inwome - FVPACIOmxI07) —_(1nn.N) 4.00 00 2. What is the net remeasurement gain for the current year? ~ a, 500,000 Remenuranen} Gain mte0 140th cf aes tefun x b, 400,000 ‘Reeosirane Ganon PA ar se c. [900,000 7 Ci.sm- 1m) maa conjiss d. 0 Am 3. What is the fair value of plan assets at year-end? + JouRNaL tNTeY © a. 15,000,000 beg. 10:0,0m | Sn, enefir old Eniplouee Peneht Expenie 4mm by Atha isnany “a Sedflewend prof DBO Prepaid Rane Boneh Cost 4e0.0ry , 11,700,000 cath sn) d. 10,500,000 Got. _ 90.0 Remeaatrement Gan THAN Pin. 4, What is the projected benefit ob! ligation at year-end? a b, 15,000,000 c. 15,400,000 d. 13,600,000 -500,0( ee athena ton t12an,m funk) PRO =e ©. Poo una bo» acued 4. 2,600,000 prepaid 2. An entity provided the following information during the current year: January 1 December 31 Fair value of plan assets 6,000,000 9,000,000 Projected benefit obligation 4,500,000 5,000,000 Prepaid/acerued benefit cost — surplus, 1,500,000 4,000,000 Asset ceiling 1,000,000 2,500,000 Effect of asset ceiling EK 500,000 1,300,000 During the year, the entity recognized current service cost P2,000,000, actual return on plan assets P400,000, and contribution to the plan P4,550,000 and benefits paid P1,950,000. The discount rate is 10%. 1, What is the employee benefit expense for the current year? * JOURNAL ENTRY iid 74m Imm a. 11,900,000 Se 2 PIA Boneh ct ! b. 1,850,000 Ink Exp PaO. 49,0) Reneciuremeny LO -Oor 150,00 c. 1,800,000 ‘th -qcome o PA Canon) mp ven. eypente Ho, d. 2,000,000 Imy-typmce MERC _SD,0N)_ +m Mm, ?Hn.m an 2. What is the net remeasurement loss for the current year? a. | 1,150,000 | Ino. m ERC Clem Mh: E¥p on tac) — FA5D,Mn (.5m-sme - 8) b. 1.200,000 Remeaturement. 1m PA "B00 ‘Acbial return, Anan, c. 800,000 iwhmone (oman) NN d. 750,000 as P 1D ah 3. What is the defined benefit cost? leas a. 3,050,000 F190. b. 3,100,000 fis, ©. 4,550,000 Fame 4. 3,000,000 neal 4. What amount of prepaid benefit cost should be reported on December 31? a, 4,000,000 ‘repoid Benefit cost up fr fae. extant oF b./ 2,500,000 ateing ony . 1,000,000 Lower 4. 1,500,000 3. An entity is committed to close a factory in 10 months and shall terminate the employment of all the remaining employees of the factory. Under the termination plan, an employee leaving before closure of factory shall receive on termination date a cash payment of P20,000. However, an employee that renders service until closure of the factory shall receive P60,000. There are 120 employees at the fete The entity expects 100 employees to leave before closure and 20 employees to render service until closure. 1. What amount should be recognized as termination benefit? a. (2,400,000 wohl cone coun erie 28.0 b. 6,400,000 ‘sn x20 > A4on0n pel ae ©. 2,000,000 Bs d, 4,000,000 tht (aaj) 2. What amount should be recognized as short-term 2 a. 3,200,000 b. 1,200,000 00 6762 FINANCIAL ACCOUNTING AND REPORTING —_YALIX/SIY/VALIX/ESCALA/SANTOSIDELA CRUZ PAS 37 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS 1, Which is the correct definition of a provision? a. A possible obligation arising from possib ion past events b. A liability of uncertain timing or uncertain amount / ¢. A liability which cannot be easily measured d. An obligation to transfer funds to an entity A provision shall be recognized as a liability under which of the following conditions? The entity has a present obligation, legal or constructive, as a result of a past event. It is probable that an outflow of resources embodying economic benefits would be required to settle the obligation. The amount of the obligation can be measured reliably. 4. (Alllof these are required conditions | A legal obligation is an obligation that is derived from all of the following, except a. Legislation 1 >. Acontract [somone ¢. Other operation of law: 4. | An established pattern of past practice +

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