PROBLEM I

1)Current service
2020,
cost in
₱ 27,045.75

2)Interest expense
2020
in
₱ -

3)PBO, Jan.1, 2020

₱ -

PROBLEM II

1)Current service
2021,
cost in
₱ 468,820.44

2)Interest expense
2021
in
₱ 46,882.04

3)PBO, Dec 31,2021

₱ 89,502.08

PROBLEM III

1)Current service
2020,
cost in
₱ 247,933.88

2)Interest expense
2020,
in
₱ 24,793.39

3)PBO, Dec 31,2020

₱ 272,727.27
PROBLEM IV

1)PBO, Jan 1, 2020 (b4 amendment)

₱ 105,132.89

2)Past service cost 2020,

₱ 113,543.52

3)Current service
2020,
cost in
₱ 170,315.28

4)Interest expense
2020,
in
₱ 13,625.22
 Summary

2021, 2022 2023

₱ 30,291.24 ₱ 33,926.19 ₱ 33,997.34

2021 2022 2023

₱ 3,245.49 ₱ 7,269.90 ₱ 12,213.43

Dec 31,2020 Dec 31,2021 Dec 31,2022

₱ 27,045.75 ₱ 60,582.48 ₱ 101,778.57

2022 2023 2024

₱ 515,702.48 ₱ 567,272.73 ₱ 624,000.00

2022 2023 2024

₱ 51,570.25 ₱ 56,727.27 ₱ 62,400.00

Dec 31,2022 Dec 31,2023 Dec 31,2024

₱ 98,452.29 ₱ 108,297.52 ₱ 119,127.27

2021 2022
₱ 272,727.27 ₱ 300,000.00

2021 2022
₱ 27,272.73 ₱ 30,000.00

Dec 31,2021 Dec 31,2022

₱ 547,933.88 ₱ 602,727.27
Jan 1, 2020 (aftr amendment) , Dec. 31,2020, , Dec. 31, 2021
₱ 157,699.34 ₱ 341,639.84 ₱ 368,971.03

2021 2022
₱ 122,627.00 ₱ 132,437.17

2021 2022
₱ 183,940.51 ₱ 198,655.75

2021 2022
₱ 14,715.24 ₱ 15,892.46
 2024
₱ 42,557.01

2024
₱ 18,283.72

Dec 31,2023 Dec 31,2024

₱ 151,989.34 ₱ 212,785.07
 Dec. 31 2022
₱ 398,488.71
On January 1, 2020, Company A agrees to pay a lump sum pension to the employees equal to 5% of their final salary time
of years worked after January 1, 2020. It is estimated that the salary of a certain employee for 2029, the last year with the
be P1,500,000. The appropriate interest rate is 12%.
Compute for the ff:
1)Current service cost in 2020, 2021, 2022, 2023 and 2024
2)Interest expense in 2020, 2021, 2022, 2023 and 2024
3)PBO, Jan. 1, 2020, Dec. 31,2020, Dec. 31,2021, Dec. 31,2022, Dec. 31,2023 and Dec. 31,2024

FINAL SALARY 1,500,000

2020 2021 2022 2023

FINAL SALARY 1,500,000 1,500,000 1,500,000 1,500,000
% OF BENEFIT 5% 5% 5% 5%
BENEFIT ON FINAL SALARY 75,000 75,000 75,000 75,000
NO. OF YEARS IN SERVICE 1 2 3 4
ACCUMULATED BENEFIT OBLIGATION 75,000 150,000 225,000 300,000
PROJECTED BENEFIT OBLIGATION ₱27,045.75 ₱60,582.48 ₱101,778.57 ₱151,989.34
OPENING PBO 0 ₱27,045.75 ₱60,582.48 ₱101,778.57
CHANGE IN PBO ₱27,045.75 ₱33,536.73 ₱41,196.09 ₱50,210.76
INTEREST ON OPENING PBO@12% 0 ₱3,245.49 ₱7,269.90 ₱12,213.43
SERVICE COST ₱25,024.75 ₱31,514.73 ₱39,173.09 ₱48,186.76
2020 2021 2022 2023 2024
PBO OPENING 0 ₱27,045.75 ₱60,582.48 ₱101,778.57 ₱151,989.34
INTEREST @12% 0 ₱ 3,245.49 ₱ 7,269.90 ₱ 12,213.43 ₱ 18,238.72
CLOSING PBO ₱27,045.75 ₱60,582.48 ₱101,778.57 ₱151,989.34 ₱212,785.07
SERVICE COST ₱27,045.75 ₱30,291.24 ₱33,926.19 ₱37,997.33 ₱42,557.01
5% of their final salary times the number
2029, the last year with the entity, will

ANSWERS NO.1
ANSWERS NO.2
4
ANSWERS NO.3

2024 2025 2026 2027 2028 2029

1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
5% 5% 5% 5% 5% 5%
75,000 75,000 75,000 75,000 75,000 75,000
5 6 7 8 9 10
375,000 450,000 525,000 600,000 675,000 750,000
₱212,785.07 ₱285,983.14 ₱373,684.63 ₱478,316.33 ₱602,678.57 ₱750,000.00
₱151,989.34 ₱212,785.07 ₱285,983.14 ₱373,684.63 ₱478,316.33 ₱602,678.57
₱60,795.73 ₱73,198.06 ₱87,701.49 ₱104,631.70 ₱124,362.24 ₱147,321.43
₱18,238.72 ₱25,534.21 ₱34,317.98 ₱44,842.16 ₱57,397.96 ₱72,321.43
₱60,795.73 ₱73,198.06 ₱87,701.49 ₱104,631.70 ₱124,362.24 ₱147,321.43
Company A has established a defined benefit plan for the employee. Annual payments under the plan are equal to high
multiplied by the number of years with the entity. On December 31, 2020, an employee had worked with the entity for
employee is P600,000.
The employee is expected to retire in 10 years and the increase in salary is expected to be 4% per year. The discount rat
years after retirement and shall receive the first annual pension payment one year after retirement.
Compute for the ff:
1)Current service cost in 2021, 2022, 2023 and 2024
2)Interest expense in 2021, 2022, 2023 and 2024
3)PBO, Dec. 31,2021, Dec. 31,2022, Dec. 31,2023 and Dec. 31,2024

CURRENT SALARY 600,000

highest lifetime salary multiplied by 2% multiplied by the number of years with the entity
600,000
24,000 RETIREMENT BENEFIT 187,200
624,000 *2% RETIREMENT PERIOD 8YRS

CSR INTEREST PBO

4 ₱426,200.40
2021 5 ₱ 468,820.44 ₱ 46,882.04 ₱ 89,502.08
2022 6 ₱ 515,702.48 ₱ 51,570.25 ₱ 98,452.29
2023 7 ₱ 567,272.73 ₱ 56,727.27 ₱ 108,297.52
2024 8 ₱ 624,000.00 ₱ 62,400.00 ₱ 119,127.27
er the plan are equal to highest lifetime salary multiplied by 2%
d worked with the entity for 15 years. The current annual salary of the

4% per year. The discount rate is 10%. The employee is expected to live 8
tirement.

18,720
A director of Company A shall receive a retirement benefit of 20% of final salary per annum for a contractual period o
The anticipated salary is P1,000,000 for 2020, P1,200,000 for 2021 and P1,500,000 for 2022.
The discount rate is 10%.
Compute for the ff:
1)Current service cost in 2020, 2021, and 2022
2)Interest expense in 2020, 2021, and 2022
3)PBO, Dec. 31,2020, Dec. 31,2021, and Dec. 31,2022

FINAL SALARY ₱ 1,500,000

BENEFIT RATE 20% ₱ 900,000.00
YEAR OF SERVICE 3 /3
ANNUAL BENEFIT ₱ 900,000.0 ₱ 300,000.00

year CSC INTEREST PBO

2020 1 ₱247,933.88 ₱24,793.39 ₱272,727.27
2021 2 ₱272,727.27 ₱27,272.73 ₱547,933.88
2022 3 ₱300,000.00 ₱30,000.00 ₱602,727.27
annum for a contractual period of 3 years.
or 2022.

Dec-20
Dec-21
Dec-22
Company A has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% multiplied by th
service multiplied by the final year’s salary. The annual benefit is payable at the end of each year.
An employee was hired by the entity on January 1,2000 and expected to retire on December 31, 2044. The employee’s reti
span 21 years.
The employee’s final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%.
On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was mad
past service years.
Compute for the ff:
1)PBO, Jan 1, 2020 (before amendment), Jan 1, 2020 (after amendment), Dec. 31,2020, Dec. 31, 2021 and Dec. 31 2022
2)Past service cost, 2020, 2021 and 2022
3)Current service cost, 2020, 2021 and 2022
4)Interest expense, 2020, 2021 and 2022

BEFORE

FINAL SALARY 800,000 2%

YEARS 45
RETIREMENT BENEFITS 720,000

year PSC INTEREST PBO

₱105,132.89 105,132.89
2020 1 ₱113,543.52 ₱9,083.48 ₱227,759.90 Dec-20
2021 2 ₱122,627.00 ₱9,810.16 ₱245,980.69 Dec-21
2022 3 ₱132,437.17 ₱10,594.97 ₱265,659.14 Dec-22
nefit equal to 2% multiplied by the number of years in
ch year.
ber 31, 2044. The employee’s retirement is expected to

discount rate is 8%.

% to 3%. The amendment was made retroactive to consider

ec. 31, 2021 and Dec. 31 2022

AFTER

FINAL SALARY 800,000 3%

YEARS 45
RETIREMENT BENEFITS 1,080,000

year CSC INTEREST PBO

₱157,699.34 157,699.34
2020 1 ₱170,315.28 ₱13,625.22 ₱341,639.84 Dec-20
2021 2 ₱183,940.51 ₱14,715.24 ₱368,971.03 Dec-21
2022 3 ₱198,655.75 ₱15,892.46 ₱398,488.71 Dec-22