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(a) Explain the following: O The difference between a defined benefit plan and a defined contribution plan. (i) "Current service cost" and "Contributions paid".

(a) Explain the following: O The difference between a defined benefit plan and a defined contribution plan. (i) "Current service cost" and "Contributions paid".

FINANCIAL ACCOUNTING
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 3 (a) Explain the following: O The difference between a defined benefit plan and a defined contribution plan. (i) “Current service cost" and "Contributions paid". (b) Moore operates a defined benefit scheme for its employecs but has yet to record anything for the current year except to expense the cash contributions which were $18 million. The opening position was a net liability of $45 million which is included in the non-current liabilities of Moore in its draft financial statements. Current service costs for the year were $15 million and interest rates on good quality corporate bonds fell from 8% at the start of the year to 6% by 31 March 20X8. In addition, a payment of $9 million was made out of the cash of the pension scheme in relation to employees who left the scheme. The reduction in the pension scheme liability as a result of the curtailment was $12 million. The actuary has assessed that the scheme is in deficit by $51 million as at 31 March 20X8. Required Calculate the gain/loss on re-measurement of the defined benefit pension net liability of Moore as at 31 March 20Xx8, and state how this should be treated
Transcribed Image Text:QUESTION 3 (a) Explain the following: O The difference between a defined benefit plan and a defined contribution plan. (i) “Current service cost" and "Contributions paid". (b) Moore operates a defined benefit scheme for its employecs but has yet to record anything for the current year except to expense the cash contributions which were $18 million. The opening position was a net liability of $45 million which is included in the non-current liabilities of Moore in its draft financial statements. Current service costs for the year were $15 million and interest rates on good quality corporate bonds fell from 8% at the start of the year to 6% by 31 March 20X8. In addition, a payment of $9 million was made out of the cash of the pension scheme in relation to employees who left the scheme. The reduction in the pension scheme liability as a result of the curtailment was $12 million. The actuary has assessed that the scheme is in deficit by $51 million as at 31 March 20X8. Required Calculate the gain/loss on re-measurement of the defined benefit pension net liability of Moore as at 31 March 20Xx8, and state how this should be treated
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