CPA REVIEW SCHOOL FOF THE PHILIPPINES

Manila

FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS

MAY 2024 CPALE BATCH 95

POSTEMPLOYMENT BENEFIT

1. An entity provided the following information during 2024:

January 1 December 31
Fair value of plan assets 6,000,000 7,900,000
Projected benefit obligation 5,000,000 5,900,000
Prepaid benefit cost – surplus 1,000,000 2,000,000
Asset ceiling 700,000 1,200,000
Effect of asset ceiling 300,000 800,000
During 2024, the entity recognized current service cost P900,000, actual return on plan assets P900,000
contribution to the plan P1,000,000 and decrease in PBO P500,000. Discount rate is 10%.
I. The increase in the effect of asset ceiling is a remeasurement loss minus the interest expense on the
beginning effect of asset ceiling.
II. The interest expense on the beginning effect of the asset ceiling is included in employee benefit
expense
III. The employee benefit expense is P830,000 for 2024.
IV. The net remeasurement gain is P800,000 for 2024.
a. All statements are true
b. All statements are false
c. Only statements I, II and III are true
d. Only statements III and IV are true

2. An entity provided the following information for 2024:

January 1 December 31
Fair value of plan assets 3,500,000 5,200,000
Projected benefit obligation 2,000,000 3,100,000
Prepaid/accrued benefit cost – surplus 1,500,000 2,100,000
Asset ceiling 800,000 1,500,000
Effect of asset ceiling 700,000 600,000
The entity gathered the following information for the current year:
Current service cost 900,000
Contribution to the plan 1,200,000
Actual return on plan assets 500,000
Discount rate 10%
I. The decrease in the effect of asset ceiling is a remeasurement gain plus interest expense on the
beginning effect of asset ceiling.
II. The employee benefit expense is P820,000 for 2024.
III. The net remeasurement gain is P320,000 for 2024.
a. All statements are true
b. All statements are false
c. Only one statement is true
d. Only two statements are true

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