1. How much is the defined benefit cost taken to profit or loss for the year 2020?2. How much is the net prepaid/ accrued defined benefit cost that was shown on December 31,2019 statement of financial position? if prepaid --> positive accrued --> negative The memorandum records of ABC Company at January 1,2020 show the following:Defined Benefit ObligationP 2,600,000Fair value of Plan Assets3,000,000The following information for 2020 is also provided:Service costP 800,000Discount rate9%Actual return on plan assetsBenefits paidContributions to the planActuarial loss on remeasurement ofDefined Benefit Obligation300,000350,000780,000100,000

Current Service cost shall increase with the increase in the present value of defined benefit…

1. How much is the defined benefit cost taken to profit or loss for the year 2020? 2. How much is the net prepaid/ accrued defined benefit cost that was shown on December 31,2019 statement of financial position? if prepaid --> positive accrued --> negative

1. How much is the defined benefit cost taken to profit or loss for the year 2020? 2. How much is the net prepaid/ accrued defined benefit cost that was shown on December 31,2019 statement of financial position? if prepaid --> positive accrued --> negative

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. How much is the defined benefit cost taken to profit or loss for the year 2020?

2. How much is the net prepaid/ accrued defined benefit cost that was shown on December 31,2019 statement of financial position? if prepaid --> positive accrued --> negative

The memorandum records of ABC Company at January 1,2020 show the following:
Defined Benefit Obligation
P 2,600,000
Fair value of Plan Assets
3,000,000
The following information for 2020 is also provided:
Service cost
P 800,000
Discount rate
9%
Actual return on plan assets
Benefits paid
Contributions to the plan
Actuarial loss on remeasurement of
Defined Benefit Obligation
300,000
350,000
780,000
100,000

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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Statement 1: The rate used to discount post‑employment benefit obligations (both funded and unfunded) shall be determined by reference to market yields at the end of the reporting period on normal quality corporate bonds. Statement 2: The return on plan assets is interest, dividends and other income derived from the plan assets, together with realized and unrealized gains or losses on the plan assets, less: (a) any costs of managing plan assets; and (b) any tax receivable by the plan itself, other than tax included in the actuarial assumptions used to measure the present value of the defined benefit obligation. Only Statement 1 is true. All statements are false. All statements are true. Only Statement 2 is true.
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