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: Present value of the defined benefit obligation 31 December 2019 Past Service Cost Net interest Current service cost Benefits paid Actuarial gain/loss on DBO 2020/$ 18 000 000 4 000 000 ? 600 000 2 000 000 ? Present value of the defined benefit obligation 31 December 2020 21 000 000 Fair value of plan assets at 31 December 2019 Return on plan assets Contributions paid to the plan during the year Benefits paid by the plan during the year Fair value of plan assets at 31 December 2020 17 000 000 ? 1500 000 2 000 000 27 500 000

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 4E
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(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.

 

Calculate the actuarial gain or loss for the defined benefit obligation for 2020 
Calculate the return on plan assets, excluding any amount recognized in 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:
Present value of the defined benefit obligation 31 December 2019
Past Service Cost
Net interest
Current service cost
Benefits paid
Actuarial gain/loss on DBO
2020/$
18 000 000
4 000 000
?
600 000
2 000 000
?
Present value of the defined benefit obligation 31 December 2020 21 000 000
Fair value of plan assets at 31 December 2019
Return on plan assets
Contributions paid to the plan during the year
Benefits paid by the plan during the year
Fair value of plan assets at 31 December 2020
17 000 000
?
1500 000
2 000 000
27 500 000
Transcribed Image Text: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: Present value of the defined benefit obligation 31 December 2019 Past Service Cost Net interest Current service cost Benefits paid Actuarial gain/loss on DBO 2020/$ 18 000 000 4 000 000 ? 600 000 2 000 000 ? Present value of the defined benefit obligation 31 December 2020 21 000 000 Fair value of plan assets at 31 December 2019 Return on plan assets Contributions paid to the plan during the year Benefits paid by the plan during the year Fair value of plan assets at 31 December 2020 17 000 000 ? 1500 000 2 000 000 27 500 000
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