Practical Accounting 1 Employee Benefits 1.

. A director of Beige Company shall receive a retirement benefit of 10% of the final salary per annum for a contractual period of three years. The director does not contribute to the scheme. The anticipated salary over the three years is P1,000,000 for 2011, P1,200,000 for 2012 and P1,400,000 for 2013. The discount rate is 5%. Using the projected unit credit method, what is the estimated pension liability on December 31, 2013? a. b. c. d. 274,284 288,000 144,000 130,608

2. Burgundy Company had the following pension-related balances on January 1, 2013: Projected benefit obligation Fair value of pension fund Unrecognized net pension loss Unrecognized past service cost 2,000,000 2,300,000 310,000 100,000

The average remaining service period of employees working on January 1, 2013 is five years. What is the amortization of the unrecognized net pension loss during the year? a. b. c. d. 62,000 16,000 20,000 36,000

On January 1, 2013, Lavender Company has a defined benefit plan with the following pension information: Fair value of plant assets Projected benefit obligation Cumulative unrecognized actuarial gains 50,000,000 45,000,000 8,000,000

On December 31, 2013, 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 is P4,000,000 during the current year and the average remaining service period of the employees is 20 years. 3. Under the corridor approach, what is the amortization of the actuarial gains for 2013? a. b. c. d. 400,000 500,000 150,000 250,000

Practical Accounting 1 Employee Benefits 4. Under the full recognition approach, what amount of actuarial gain is included in other comprehensive income for 2013? a. b. c. d. 4,000,000 2,000,000 3,000,000 5,000,000

Periwinkle Company provided the following information on December 31, 2013. Service cost 520,000 Actual return on pension plan asset 810,000 Interest cost 590,000 Excess of expected return over actual return on pension plan asset 150,000 Amortization of deferred pension loss from prior years 240,000 Amortization of past service cost 360,000 Contribution to pension fund 950,000 5. What is the net pension expense for 2013? a. b. c. d. 510,000 390,000 900,000 750,000

6. Thistle Company amended its pension plan on January 1, 2013 as follows: Before Amendment 950,000 1,300,000 After Amendment 1,425,000 1,900,000

Accumulated benefit obligation Projected benefit obligation

What is the total amount of unrecognized past service cost as a result of the amendment? a. b. c. d. 950,000 600,000 475,000 125,000

7. On January 1, 2013, Ultramarine Company adopted a defined benefit plan. The plans service cost of P750,000 was fully funded at the end of 2013. Past service cost was funded by contribution of P300,000 in 2011. Amortization of past service cost was P120,000 for 2013. What is the prepaid pension cost on December 31, 2013? a. b. c. d. 180,000 300,000 420,000 540,000

Practical Accounting 1 Employee Benefits 8. Khaki Company had the following balances relating to its defined benefit plan on December 31, 2013: Fair value of plan assets Past service cost unrecognized Net actuarial loss unrecognized Projected benefit obligation Present value of available future refund and reduction in future contribution 37,000,000 2,000,000 3,000,000 33,000,000 1,000,000

What amount should be reported as prepaid benefit cost on December 31, 2013? a. b. c. d. 9,000,000 8,000,000 6,000,000 5,000,000

9. At year-end, Ochre Company had the following balances in relation to a defined benefit plan. Plan assets 1,150,000 Plan liability 1,900,000 Unrecognized actuarial loss 200,000 What amount should be reported in the statement of financial position for the plan deficit? a. 1,900,000 b. 750,000 c. 950,000 d. 550,000 10. Russet company provides postretirement health care benefits to employees who have completed at least ten years of service and are aged fifty-five years or older when retiring. Employees retiring have a medium age of sixty-two, and no one has worked beyond age sixty-five. An employee is hired at fortyeight years old. The attribution period for accruing the expected postretirement health care benefit obligation to the employee is during the period when the employee is aged a. b. c. d. 48 to 65 48 to 58 55 to 65 55 to 62

On January 1 of the current year, Tangerine Company had a projected benefit obligation of P10,000,000 and a pension fund with a fair value of P9,200,000. There was no unrecognized past service cost nor were there deferred pension gains or losses. The following information relates to the pension plan during the current year: Service cost Actual return on the pension fund Benefits paid to retirees Contribution to the pension fund 1,200,000 250,000 1,100,000 1,050,000 Discount rate for PBO Expected return on pension fund 9% 10%

Practical Accounting 1 Employee Benefits 11. What is the net periodic pension cost for the current year? a. b. c. d. 1,180,000 2,100,000 1,850,000 1,050,000

12. What is the fair value of the pension fund on December 31? a. b. c. d. 9,400,000 9,450,000 8,350,000 9,150,000

13. What is the projected benefit obligation on December 31? a. b. c. d. 11,000,000 12,100,000 11,200,000 10,100,000

14. What is the unrecognized actuarial gain or loss on December 31? a. b. c. d. 670,000 gain 670,000 loss 650,000 gain 650,000 loss

15. What is the accrued pension liability on December 31? a. 1,600,000 b. 800,000 c. 930,000 d. 150,000