Problem #17 - 10

Annual Pension Payment (500,000 x 1.22 = 610,000 x 3% x 15 years)

Multiplied By: PV of an ordinary annuity of 1 at 12% for 6 periods
Projected Benefit Obligation - 12/31/2025
Multiplied By: PV of 1 at 12% for 5 periods
Projected Benefit Obligation - 12/31/2021

Problem #17 - 12

1. Annual Pension Payment (500,000 x 2.190 = 1,095,000 x 3% x 15 years)

2. Annual Pension Payment 492,750

Multiplied By: PV of an ordinary annuity of 1 at 12% for 10 periods 5.65
Projected Benefit Obligation - 12/31/2040 2784037.5
Multiplied By: PV of 1 at 12% for 20 periods 0.104
Projected Benefit Obligation - 12/31/2021 ₱ 289,540

Problem #17 - 13

1. Annual Pension Payment (800,000 x 2% x 20 years) 320,000

Multiplied By: PV of an ordinary annuity of 1 at 8% for 21 periods 10.02
Projected Benefit Obligation - 12/31/2045 3206400
Multiplied By: PV of 1 at 8% for 25 periods 0.15
Projected Benefit Obligation before amendment - 01/01/2021 ₱ 480,960.00

2. Annual Pension Payment (800,000 x 3% x 20 years) 480,000

Multiplied By: PV of an ordinary annuity of 1 at 8% for 21 periods 10.02
Projected Benefit Obligation - 12/31/2045 4809600
Multiplied By: PV of 1 at 8% for 25 periods 0.15
Projected Benefit Obligation after amendment - 01/01/2021 ₱ 721,440.00

3. Projected Benefit Obligation after amendment 721,440

Projected Benefit Obligation before amendmen -480,960
Past Service Cost for 2021 ₱ 240,480.00
 274,500
4.11
1128195
0.57
₱ 643,071.15 A.

₱ 492,750.00 A.

B.

A.

B.

C.
Problem # 18 - 9

Projected Benefit Obligation - January 1 7,200,000

Service Cost 1,800,000
Interest Cost (7,200,000 x 10%) 720,000
Pension Benefits Paid -1,500,000
Projected Benefit Obligation - December 31 ₱ 8,220,000.00

Problem #18 - 11

Projected Benefit Obligation - December 31 2,160,000

Pension Benefits Paid 135,000
Interest Cost -120,000
Projected Benefit Obligation - Januray 1 (120,000 / 8%) -1,500,000
Service Cost ₱ 675,000.00

Problem #18 - 13

Fair Value of Plan Assets - December 31 5,250,000

Benefits Paid 850,000
Employer Contributions -1,100,000
Fair Value of Plan Assets - January 1 -3,500,000
Actual Return on Plan Assets ₱ 1,500,000.00

Problem #18 - 15

1. Fair Value of Plan Assets - December 31 4,400,000

Benefits Paid to Retirees 250,000
Contribution to the Plan -300,000
Fair Value of Plan Assets - January 1 -3,500,000
Actual Return on Plan Assets ₱ 850,000.00

2. Actual Return on Plan Assets 850000

Interest Income (3,500,000 x 10%) -350,000
Remeasurement Gain on Plan Assets ₱ 500,000.00

Problem #18 - 17

Current Service Cost

Past Service Cost During the Year
Interest Expense on Projected Benefit Obligation (2,000,000 x 10%)
Interest Income on Plan Assets
Employee Benefit Expense
Employer Contribution
Prepaid Pension Cost, January 1
Accrued Pension Cost, December 31

Problem #18 - 19

Projected Benefit Obligation after amendment 1,900,000

Projected Benefit Obligation before amendment -1,300,000
Past Service Cost ₱ 600,000.00

Problem #18 - 21

1. Current Service Cost

Interest Expense on Projected Benefit Obligation (7,500,000 x 10%)
Interest Income on Plan Assets (7,000,000 x 10%)
Gain on Plant Settlement (500,000 - 400,000)
Employee Benefit Expense

2. Actual Return on Plant Assets 840,000

Interest Income on Plan Assets -700,000
Decrease in Projected Benefit Obligation 200,000
Net Amount of Remeasurements, December 31 ₱ 340,000.00

3. Fair Value of Plant Assets, January 1 7,000,000

Contribution to the Plan 1,200,000
Actual Return on Plant Assets 840,000
Benefits Paid to Retirees -1,500,000
Settlement Payment of Defined Benefit Obligation -400,000
Fair Value of Plant Assets, December 31 ₱ 7,140,000.00

4. Projected Benefit Obligation, January 1 7,500,000

Current Service Cost 1,400,000
Interest Expense on Projected Benefit Obligation 750,000
Benefits Paid to Retirees -1,500,000
Decrease in Projected Benefit Obligation -200,000
Present Value of Defined Benefit Obligation Settled -500,000
Projected Benefit Obligation, December 31 ₱ 7,450,000.00

5. Prepaid / Accrued Benefit Cost - Transition (7,000,000 - 7,500,000) (credit)

Debit Adjustment (1,350,000 - 340,000 - 1,200,000)
Prepaid / Accrued Benefit Cost, December 31 (credit )
Problem #18 - 25

1. Current Service Cost

Interest Expense on Projected Benefit Obligation (2,000,000 x 10%)
Interest Expense on Effect of Asset Ceiling (700,000 x 10%)
Interest Income on Plan Assets
Employee Benefit Expense

2. Actual Return on Plan Assets

Interest Income on Plan Assets
Remeasurement Gain on Plan Assets
Remeasurement Gain on Asset Ceiling (700,000 - 600,000 + 70,000)
Net Remeasurement Gain for the Current Year

3. Effect of Asset Ceiling 700,000

Asset Ceiling, January 1 800,000
Prepaid Benefit Cost, December 31 ₱ 1,500,000.00 C.
D.

A.

A.

B.

B.

720,000
500,000
380,000
-400,000
 1200000
-400,000
-200,000
₱ 600,000.00 D.

B.

1,400,000
750,000
-700,000
-100,000
₱ 1,350,000.00 C.

C.

A.

B.

(500,000)
190,000
-₱ 310,000.00 B.
 900,000
200,000
70,000
-350,000
₱ 820,000.00 B.

500,000
-350,000
150,000
170,000
₱ 320,000.00 A.
Problem #19 - 5

Vacation Pay 1,100,000

Sick Pay 900,000
Liability for Compensated Absences ₱ 2,000,000.00 B.

Problem #19 - 7

Employee 2's Accrued Vacation Pay (600 x 5) ₱ 3,000.00

Employee 3's Accrued Vacation Pay (800 x 15) 12,000
Total Accrued Vacation Pay, December 31 ₱ 15,000.00

Problem #19 - 9

Wages Expense Related to 2021 (10,000 x 200 = 2,000,000 x 10%)

Problem #19 - 11

Vacation Liability - 12/31/2022

(50 employees x 15 vacation days not taken x 8 hours x ₱80 per hour)

Problem #19 - 12

Accrued Salaries Payable, 12/31/2022 (900,000 / 10 = 90,000 x 3 = 270,000 + 50,000)

 C.

₱ 200,000.00 C.

₱ 480,000.00 B.

₱ 320,000.00 B.