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Employee Benefits 2 Employee Benefits 2
Employee Benefits 2 Employee Benefits 2
Employee Benefits 2
INTERMEDIATE ACCOUNTING 2
PROBLEM SOLVING: DEFINED BENEFIT PLAN
(Use the below problem to answers the succeeding four (4) questions.)
At the beginning of current year, Rachel Company reported the fair value of plan assets at
P6,700,000 and projected benefit obligation at P7,600,000. The entity revealed the following
information for the current year”
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INTERMEDIATE ACCOUNTING 2
DEFINED BENEFIT PLAN
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INTERMEDIATE ACCOUNTING 2
PROBLEM SOLVING: DEFINED BENEFIT PLAN
a. 1,300,000 c. 1,500,000
b. 1,050,000 d. 1,100,000
500k+600k-350k+250k+300k
6. What is the net remeasurement for the current year?
a. 500,000 gain c. 300,000 gain
b. 200,000 loss d. 300,000 loss
850k-350k-200k
7. What is the fair value of plan assets at year-end?
a. 3,650,000 c. 4,900,000
b. 4,650,000 d. 5,850,000
3.5m+1.5m+850k-1.2m-1m
8. What is the projected benefit obligation at year-end?
a. 5,650,000 c. 6,400,000
b. 6,650,000 d. 6,450,000
6m+500k+300k+600k-950k-1m+200k
9. Information on EQUANIMITY COMPOSURE Co.’s defined benefit plan is shown below:
PV of defined benefit obligation, Jan. 1 ₱480,000
Solution:
PV of defined benefit obligation
480,000 Jan. 1
Benefits paid 200,000 120,000 Current service cost (squeeze)
48,000 Interest cost (480,000 x 10%)
40,000 Actuarial loss - increase in PV of PBO
Dec. 31 488,000
10. Flash Inc. has a defined benefit plan for its employees. The following information relates to
this plan:
An actuarial loss of ₱20,000 was incurred during 2002. There was no unrecognized prior service
cost or unrecognized gains or losses. Flash's defined benefit cost for the year was
a. 880,000. b. 920,000. c. 640,000. d. 988,000.
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INTERMEDIATE ACCOUNTING 2
DEFINED BENEFIT PLAN
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INTERMEDIATE ACCOUNTING 2
PROBLEM SOLVING: DEFINED BENEFIT PLAN
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INTERMEDIATE ACCOUNTING 2
DEFINED BENEFIT PLAN
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