Employee benefits

Question 1

Defined contribution plan

Answer 1

Risk falls upon the employee

Question 2

Defined benefit plan

Answer 2

Risk falls upon the employer

Question 3

Actuarial risk

Answer 3

Risk of cost of providing benefits

Question 4

Investment risk

Answer 4

Risk that assets will be insufficient to pay required benefits

Question 5

Steps accounting for defined benefit post-employment plans

Answer 5

1. Determine the deficit or surplus of the plan
2. Determine the amount of the net defined benefit liability (asset)
   - Deficit of fund (PV of DBO > FS of Plan assets) -> liability
   - Surplus of fund => asset the lower of
   i. Surplus of the fund, and
   ii. Asset ceiling (PV of future refund from the plan or payment reductions)
3. Determine the amounts to be recognized in profit or loss
4. Determine the re-measurements of the net defined benefit liability (asset) to be recognized in OCI

Question 6

amounts to be recognized in P&L

Answer 6

Current service cost
Past service cost
Net interest

Question 7

Amounts to be recognized in OCI

Answer 7

Actuarial gains and losses
Excess return on plan assets