FlagStaff Ltd has a defined benefit pension plan for its employees. The company is considering introducing a defined benefit contribution plan, which will be available to all incoming staff. Although the defined benefit plan is now closed to new staff, the fund is active for all employees who have tenure with the company. In 2020, the following actuarial report was received for the defined benefit plan: 2020/$ Present value of the defined benefit obligation 31 December 2019 18 000 000 Past Service Cost 4 000 000 Net interest ? Current service cost 600 000 Benefits paid 2 000 000 Actuarial gain/loss on DBO ? Present value of the defined benefit obligation 31 December 2020 21 000 000 Fair value of plan assets at 31 December 2019 17 000 000 Return on plan assets ? Contributions paid to the plan during the year 1 500 000 Benefits paid by the plan during the year 2 000 000 Fair value of plan assets at 31 December 2020 27 500 000 Additional information (a) All contributions received by the plan were paid by Flagstaff Ltd. (b) The interest rate used to measure the present value of the defined benefit obligation was 9% at 31 December 2019 and 31 December 2020. (c) The asset ceiling was nil at 31 December 2019 and 31 December 2020. Determine the surplus or deficit of Flagstaff Ltd.’s defined benefit plan at 31 December 2020. Determine the net defined benefit asset or liability that should be recognized by Flagstaff Ltd at 31 December 2020 Calculate the net interest for 2020
FlagStaff Ltd has a defined benefit pension plan for its employees. The company is
considering introducing a defined benefit contribution plan, which will be available to
all incoming staff. Although the defined benefit plan is now closed to new staff, the
fund is active for all employees who have tenure with the company. In 2020, the
following actuarial report was received for the defined benefit plan:
2020/$
Present value of the defined benefit obligation 31 December 2019 18 000 000
Past Service Cost 4 000 000
Net interest ?
Current service cost 600 000
Benefits paid 2 000 000
Actuarial gain/loss on DBO ?
Present value of the defined benefit obligation 31 December 2020 21 000 000
Fair value of plan assets at 31 December 2019 17 000 000
Return on plan assets ?
Contributions paid to the plan during the year 1 500 000
Benefits paid by the plan during the year 2 000 000
Fair value of plan assets at 31 December 2020 27 500 000
Additional information
(a) All contributions received by the plan were paid by Flagstaff Ltd.
(b) The interest rate used to measure the present value of the defined benefit
obligation was 9% at 31 December 2019 and 31 December 2020.
(c) The asset ceiling was nil at 31 December 2019 and 31 December 2020.
Determine the surplus or deficit of Flagstaff Ltd.’s defined benefit plan at 31 December
2020.
Determine the net defined benefit asset or liability that should be recognized by Flagstaff
Ltd at 31 December 2020
Calculate the net interest for 2020
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