IA

POSTEMPLOYMENT BENEFIT

1. These are employee benefits which are payable after completion of employment.
A. Termination benefits
B. Short-term employee benefits
C. Other long-term employee benefits
D. Postemployment employee benefits

2. Vested benefits
A. Are defined by all of these.
B. Are not contingent upon additional service under the plan.
C. Are those that the employee is entitled to receive even if fired.
D. Usually require a certain minimum number of years of service.

3. When an entity pays insurance premiums to fund a postemployment benefit plan and the entity has
no legal or constructive obligation on the policy, the postemployment benefit plan shall be treated
as
A. Multiemployer plan
B. Defined benefit plan
C. Defined contribution plan
D. Either defined contribution plan or defined benefit plan

4. Which of the following is not a characteristic of a defined contribution plan?

A. The employer contribution each period is based on a formula.
B. The accounting for a defined contribution plan is straightforward and uncomplicated.
C. The benefits to be received are usually determined by an employee's highest salary.
D. The benefit of gain or the risk of loss from the assets contributed to the plan are borne by the
employee.

5. Which of the following statements characterizes defined benefit plans?

A. The investment risk is borne by the employee.
B. Retirement benefits are based on the plan's benefit formula.
C. Retirement benefits depend on how well pension fund assets have been managed.
D. Defined benefit plans are comparatively simple in construction and raise few accounting issues
for employers.

6. Demographic actuarial assumptions include all of the following, except

A. Discount rate
B. Rate of employee turnover
C. Disability and early retirement
D. The proportion of plan members eligible for benefits

7. The service cost of a defined benefit plan comprises all of the following, except
A. Current service cost C. Net interest
B. Gain or loss on settlement D. Past service cost

8. What is the treatment of actuarial gains and losses?

A. As remeasurements recognized immediately in profit or loss.
B. As remeasurements recognized immediately in retained earnings
C. As remeasurements recognized immediately in other comprehensive income and
subsequently recycled to profit or loss.
D. As remeasurements recognized immediately in other comprehensive income and permanently
excluded from profit or loss.

9. An entity with a defined benefit plan must disclose all of the following, except
A. Assumed discount rate and rate of compensation increase.
B. The amount of the net periodic benefit cost with the components shown separately.
C. A reconciliation of the accrued or prepaid pension cost with the pension expense reported in
 the income statement.
D. The funded status of the pension plan showing separately the assets, current liabilities and
noncurrent liabilities recognized.

10. At the beginning of current year, an entity provided the following information in connection with a
defined benefit plan:

Fair value of plan assets 6,500,000

Projected benefit obligation (7,500,000)
Prepaid/accrued benefit cost (1,000,000)

The entity revealed the following transactions affecting the plan for the current year:

Current service cost 1,200,000

Past service cost – remaining vesting period of covered employees is 5 years 200,000
Contribution to the plan 1,300,000
Benefits paid to retirees 1,500,000
Decrease in projected benefit obligation due to change in actuarial assumptions 250,000
Actual return on plan assets 800,000
Discount or settlement rate 10%
Expected return on plan assets 12%

What amount should be reported as employee benefit expense for the current year?
1,500,000
a. 1,400,000
b. 1,340,000
c. 2,150,000

11. What amount should be reported as net remeasurement for the current year?
a. 400,000 gain b. 400,000 loss c. 150,000 gain d. 150,000 loss

12. What amount should be reported as fair value of plan assets at year-end?
a. 8,600,000 b. 7,100,000 c. 8,450,000 d. 7,650,000

13. What amount should be reported as projected benefit obligation at

year-end?
a. 8,400,000 b. 7,900,000 c. 8,900,000 d. 9,400,000

14. What amount should be reported as accrued or prepaid benefit cost at year-end?
a. 1,600,000 accrued b. 1,600,000 prepaid c. 800,000 accrued d. 800,000 prepaid

15. Winter Company provided the following plan information for the current year:
January 1 Projected benefit obligation 3,500,000
Accumulated benefit obligation 2,800,000
During the year Pension benefits paid to retired employees 250,000
December 31 Projected benefit obligation 4,200,000
Accumulated benefit obligation 3,100,000
Discount or settlement rate 10%
There is no change in actuarial assumptions during the year. What is the current service cost for
the current year?
A. 250,000 C. 600,000
B. 270,000 D. 950,000

16. On January 1, 2024, Monica Company has a defined benefit plan with the following information
prior to the adoption of PAS 19R:
 Fair value of plan assets 50,000,000
Projected benefit obligation 45,000,000
Cumulative unrecognized actuarial gain 8,000,000
On December 31, 2024, the fair value of the plan assets has risen by P5,000,000 and the
projected benefit obligation has risen by P3,000,000. The actuarial gain during the year is
P10,000,000 and the average remaining service period of the employees is 20 years. What total
amount of actuarial gain should be reported as a component of other comprehensive income for
2014?
A. 0 C. 10,000,000
B. 8,000,000 D. 18,000,000

An entity provided the following data:

January 1 Fair value of plan assets 8,750,000

Market-related value of plan assets 7,150,000
During the year Benefits paid to retirees 1,000,000
Contribution to plan 700,000
Actual return on plan assets 950,000
Discount rate 6%

17. What amount should be reported as fair value of plan assets on December 31?
a. 9,925,000 b. 9,400,000 c. 7,800,000 d. 8,225,000

18. What amount should be reported as remeasurement gain or loss on plan assets?
a. 950,000 gain b. 950,000 loss
c.425,000 gain d. 425,000 loss

An entity provided the following information:

January 1 December 31

Fair value of plan assets 3,500,000 3,700,000

Market related value of plan assets 2,800,000 3,950,000
Contribution to the plan 300,000
Benefits paid to retirees 250,000
Discount rate 10%
What amount should be reported as actual return on plan assets for the current year?
a. 150,000 b. 300,000 c. 450,000 d. 100,000

19. What amount should be reported as remeasurement gain or loss on plan assets?
a. 200,000 gain b. 200,000 loss c. 250,000 gain d. 250,000 loss

20. At the beginning of current year, an entity reported the fair value of plan assets at P6,000,000
and projected benefit obligation at P8,000,000. During the year, the entity made a lump sum
payment to certain plan participants in exchange for their rights to receive specified
postemployment benefits. The lump sum payment was P800,000 and the present value of the
defined benefit obligation settled was P1,000,000. In addition, the entity provided the following
data are gathered during the current year:

Current service cost 900,000

Actual return of plan assets 800,000
Increase in projected benefit obligation due
to change in actuarial assumptions 300,000
 Contribution to the plan 700,000
Discount rate 12%

What amount should be reported as employee benefit expense?

a. 1,140,000 b. 1,860,000 c. 900,000 d. 940,000

21. What amount should be reported as fair value of plan assets on December 31?
a. 7,500,000 b. 6,700,000 c. 6,000,000 d. 5,900,000
22. What amount should be reported as projected benefit obligation on December 31?
a. 9,360,000 b. 8,860,000 c. 9,160,000 d. 8,560,000

OTHER EMPLOYEE BENEFITS

23. An entity reported that the employees are each entitled to two weeks of paid vacation leave.
During the current year, the employees earned 1,500 weeks of vacation leave and used 1,000
weeks. The current salary of the employees is an average of P3,000 per week and the salary
is expected to increase by P300 per week or a future weekly salary of P3,300.

What is the vacation pay expense for the current year if the benefit is accumulating and vesting?
a. 3,000,000 b. 4,500,000 c. 4,650,000 d. 4,950,000
24. What is the vacation pay expense for the current year if the benefit is nonaccumulating and
nonvesting?
a. 3,000,000 b. 4,500,000 c. 4,650,000 d. 4,950,000

- Completed - 😊