A lump sum benefit is payable on termination of serviceand equal to 1 per cent of final salary for each year ofservice. The salary in year 1 is P10,000 and is assumed toincrease at 7 per cent (compound) each year. The discountrate used is 10 per cent per year. The entity does not fundits obligation to pay lump-sum benefits. The employee isexpected to leave at the end of year 5.The change in year 2 in the net defined benefit liabilitythat arises from the passage of time (interest cost) is

The net outlined profit liability (asset) is that the deficit or surplus, adjusted for any impact of…

Answered: A lump sum b

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 6RE

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A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent (compound) each year. The discount rate used is 10 per cent per year. The entity does not fund its obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5. The increase in the present value of the defined benefit obligation resulting from employee service in year 2 (current service cost) is a P131 b P196 c P98 d P89
A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent (compound) each year. The discount rate used is 10 per cent per year. The entity does not fund its obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5. The defined benefit liability (deficit) at the end of the second year is
À lump sum benefit is payable on termination of service and equal to 1% of final salary for each year of service. The salary in Year 1 is P10,000 and is assumed to increase at 7% (compound) each year. The discount rate used is 104 per year. The entity does not fund its obligation to pay lump sum benefits. The employee is expected to leave at the end of Year 5. The defined benefit liability (deficit) at the end of the second year is
6 A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent (compound) each year. The discount rate used is 10 per cent per year. The entity does not fund its obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5. The increase in the present value of the defined benefit obligation resulting from employee service in year 2 (current service cost) is Group of answer choices P98 P196 P89 P131
If the employee benefits remain unpaid, how much liability shall Entity A accrue at the end of the year? A. 400,000 B. 200,000 C. 0 D. 300,000
Roller Co. amends its defined benefit plan decreasing the retirement age from 60 to 58. As a result, the defined benefit obligation will increase by P4,000,000. The average remaining service life of the employees is 4 years. How should Roller Co. account for the increase in the obligation?A. Not recognize the resulting increase in the obligationB. Recognize the P4,000,000 as expense after 4 yearsC. Amortize the P4,000,000 as expense over 4 yearsD. Recognize the P4,000,000 as expense in the current year
Company A has established a defined benefit plan for the employee. Annual payments under the plan are equal to highest lifetime salary multiplied by 2% multiplied by the number of years with the entity. On December 31, 2020, an employee had worked with the entity for 15 years. The current annual salary of the employee is P600,000. The employee is expected to retire in 10 years and the increase in salary is expected to be 4% per year. The discount rate is 10%. The employee is expected to live 8 years after retirement and shall receive the first annual pension payment one year after retirement. Compute for the ff: 1)Current service cost in 2021, 2022, 2023 and 2024 2)Interest expense in 2021, 2022, 2023 and 2024 3)PBO, Dec. 31,2021, Dec. 31,2022, Dec. 31,2023 and Dec. 31,2024
An employee receives the following compensation and benefits during the year while working:Annual Basic Salary Php 245,000.0013th Month Pay Php 20,416.67Company Bonuses Php 5,500.00Rice Subsidy Php 1,800.00/yearClothing Allowance Php 5,000.00/yearMedical benefits Php 9,500.00/yearLaundry allowance Php 2,400.00/year Present the computation of the taxable and non-taxable compensation income of the employee.
If an employee has received over one million dollars in supplemental earnings for the year, any further supplemental earnings should be withheld a.at a 22% withholding rate. b.using the wage bracket method. c.at a 37% withholding rate. d.using the aggregate method.
ABC Corp. grants its employees 20 days' vacation leave for the whole year. Such vacation leave may be converted into cash before the end of the year. Inday, an accounting clerk of the company, who is earning a rate of P 600 per day, monetized her unused vacation leave of P 6,600 at the end of the year. The whole amount of P 6,600 monetized unused vacation is: S1: Part of Inday's taxable compensation. S2: Partly treated taxable compensation and partly exempt from income tax. a. Only S1 is true b. Only S2 is truc O c. Both are true O d. Both are false
Company A has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% multiplied by the number of years in service multiplied by the final year’s salary. The annual benefit is payable at the end of each year. An employee was hired by the entity on January 1,2000 and expected to retire on December 31, 2044. The employee’s retirement is expected to span 21 years. The employee’s final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. Compute for the ff: 1)PBO, Jan 1, 2020 (before amendment), Jan 1, 2020 (after amendment), Dec. 31,2020, Dec. 31, 2021 and Dec. 31 2022 2)Past service cost, 2020, 2021 and 2022 3)Current service cost, 2020, 2021 and 2022 4)Interest expense, 2020, 2021 and 2022
expected to retire on December 31, 2044. The employee's multiplied by the number of years in service multiplied by the final year's salary. The annual benefit is payable at the indicating a plan formula for annual benefit equal to 2% An employee was hired by the entity on January 1, 2000 and Generous Company has established a defined benefit plan Problem 17-13 (IAA) end of each year. retirement is expected to span 21 years. The employee's final salary at retirement is expected to b P800,000 and the appropriate discount rate is 8%. On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. The present value of an ordinary annuity of 1 at 8% for 21 periods is 10.02 and the present value of 1 at 8% for 25 periods is 0.15. 1. What is the projected benefit obligation before amendment on January 1, 2020? a. 480,960 b. 320,000 c. 160,000 d. 400,000 2. What is the projected benefit obligation…

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