Answered: How much is the retirement benefit…

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

Integrity Company was organized way back in 2000. It was in 2016 that the company adopted a defined benefit plan for its employees. After five years of profitable operations, an amendment in its defined benefit plan was effected on January 1, 2021 resulting to increased employee benefits. The records of the company show the following balances on January 1, 2021:

Defined benefit obligation - P7,600,000
Plan assets at fair value - P6,200,000

For the year 2021, after considering the actuarial assumptions about demographic variables and financial variables, the following were reported:

Current service cost - P560,000
Contributions made to the fund - P1,750,000
Past service cost resulting from the plan amendment - P920,000
Benefits paid - P1,350,000
Discount rate - P8%
Actual return on plan assets - P602,000
Actuarial loss on remeasurement of defined benefit obligation at year end - P102,000

How much is the retirement benefit expense taken to profit or loss for the year ended December 31, 2021?

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