1

Question 1

what is the pension component for I/S

Answer 1

SIR AGE
current service cost 
\+ interest expense ( discount rate )
- return on plan asset 
\+ amortization of prior service cost
\+ (gain) loss 
\+ amortization of existing net obligation or net asset 
= 
Net periodic pension cost 

DR net periodic pension cost (End)
Cr pension liabilities ( current)
CR OCI

Question 2

how to compute the interest cost

Answer 2

= beginning BPO * discount rate

Question 3

how to compute the rate on plan asset

Answer 3

two ways either
1- actual rate of return

Beg. FV of plan asset
\+ contribution
\+ actual rate of return
- benefit paid 
= Ending FV of plan asset

or
2- expected return on plan asset

Beg. FV of plan asset
* expected rate of return on plan asset
= expected rate of return on plan asset

Question 4

how to compute the amortization of unrecognized prior service cost

Answer 4

= Beg unrecognized prior service cost
/ average remaining service life
note that the unamortized is in OCI

Question 5

how to compute the Gain or Loss

Answer 5

either by recognize immediately on IS
or recognize on OCI by amortization using corridor approach

unrecognized gain or loss ( beg.)
- 10% greater of PBO or market related value ( Beg)
= the excess 
/ average remaining life
= amortization

Question 6

how to compute the Exiting net obligation / net asset

Answer 6

PBO 
- FV
= initial unfunded obligation 
/ greater of 15 years or average service years 
= amortization

not that AGE in OCI

Question 7

In B/S what amount we used

Answer 7

1- funded statue 
which is 
FV of plan asset
- PBO
= funded staues

Question 8

how to adjust the fund statue

Answer 8

Beg fund statue ( pension asset/ liability )
\+ contribution 
- service cost
- interest expense
\+ expected rate of return
- prior service cost
\+ gain
- net loss
= ending fund statues

Question 9

what is the journal entries used for pension plan

1- for contribution in the Beg

Answer 9

Dr pension benefit liability

Cr Cah

Question 10

2- to report SIR

Answer 10

Dr periodic benefit cost
CR pension liability ( current)

DR deferred tax asset
Cr deferred tax benefit ( IS)

Question 11

3- to report the amortized prior service the same entry for the gain / loss and the Existing net transition

Answer 11

Dr net periodic cost
Cr OCI

DR deferred tax benfit OCI
Cr deferred tax benefit IS

Question 12

A public entity that sponsors a defined benefit pension plan must disclose in the notes to its financial statements a reconciliation of

Answer 12

One of the required disclosures by a public entity with a defined benefit pension plan is a reconciliation of the beginning and ending balances of the PBO. It should display separately the effects during the period of (1) service cost, (2) interest cost, (3) participants’ contributions, (4) actuarial gains and losses, (5) foreign currency exchange rate changes, (6) benefits paid, (7) plan amendments, (8) business combinations, (9) divestitures, (10) curtailments, (11) settlements, and (12) special termination benefits.

Question 13

how to compute the PBO

Answer 13

Beg. PBO
\+ service cost
\+ interest expense
\+ prior service cost
\+ actuarial loss
- actuarial gain
- benefit paid 
= End PBO

Question 14

Which statement is true regarding a defined benefit pension plan?

Answer 14

A defined benefit plan defines an amount of pension benefits to be provided to each employee. This amount depends on future events, such as (1) how long the employee lives, (2) how many years of service the employee renders, and (3) the employee’s compensation before retirement. Many of these events cannot be controlled by the employer.

Question 15

Under IFRS, how is the discount rate for pensions determined?

Answer 15

This answer is correct because the discount rate to be used for pension accounting is determined by the market yield at the end of the reporting period for high-quality corporate bonds having a similar term or maturity.

Question 16

The interest cost component of the NPPBC is the

Answer 16

Interest cost reflects the change in the APBO during the period resulting solely from the passage of time. It equals the APBO at the beginning of the period times the assumed discount rate used in determining the present value of future cash outflows currently expected to be required to satisfy the obligation.

Question 17

Under IFRS, what amount of remeasurement of plan assets is recognized in Year 1?

Answer 17

The remeasurement of plan assets for the period is the return on plan assets, excluding interest income on plan assets. Remeasurement of plan assets can be calculated from the plan assets equation.
fair value of plan assets January 1, Year 1
$50,000
Contribution on December 31, Year 1
12,500
Benefits paid on December 31, Year 1
(8,000)
Interest income on plan assets ($50,000 × 5%)
2,500
Remeasurement of plan assets
3,000
Fair value of plan assets December 31, Year 1
$60,000

Question 18

What is the present value of all future retirement payments attributed by the pension benefit formula to employee services rendered prior to that date only?

Answer 18

the present value of future retirement payments attributed by the pension benefit formula to employee services rendered prior to that date is the accumulated benefit obligation, which is based on current salaries.