On January 1, 2021 the memorandum records of Dakak Company’s defined benefit plan showed the following: Fair value of plan assets P 14,000,000 Unamortized past service cost 700,000 Unrecognized actuarial loss 2,000,000 Projected benefit obligation (15,000,000) Prepaid/accrued benefit cost – debit P 1,700,000 During 2021, the entity determined that its current service cost was P2,000,000 and the interest cost is 10%. The expected return on plan assets was 10% but the actual return during the year was 12%. Past service cost and any actuarial gain or loss should be amortized over 10 years. Other related information is as follows: Contribution to the plan P 2,400,000 Benefits paid to retirees during 2011 3,000,000 Decrease in accrued benefit obligation due to changes in actuarial assumption 400,000 a. What should be reported in the income statement for the current year as employee benefit expense? b. What is the projected benefit obligation on December 31, 2021? c. What is the balance of the prepaid (accrued) benefit cost on December 31, 2021?
On January 1, 2021 the memorandum records of Dakak Company’s defined benefit plan showed the following: Fair value of plan assets P 14,000,000 Unamortized past service cost 700,000 Unrecognized actuarial loss 2,000,000 Projected benefit obligation (15,000,000) Prepaid/accrued benefit cost – debit P 1,700,000 During 2021, the entity determined that its current service cost was P2,000,000 and the interest cost is 10%. The expected return on plan assets was 10% but the actual return during the year was 12%. Past service cost and any actuarial gain or loss should be amortized over 10 years. Other related information is as follows: Contribution to the plan P 2,400,000 Benefits paid to retirees during 2011 3,000,000 Decrease in accrued benefit obligation due to changes in actuarial assumption 400,000 a. What should be reported in the income statement for the current year as employee benefit expense? b. What is the projected benefit obligation on December 31, 2021? c. What is the balance of the prepaid (accrued) benefit cost on December 31, 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2021 the memorandum records of Dakak Company’s defined benefit plan showed the following:
Fair value of plan assets P 14,000,000
Unamortized past service cost 700,000
Unrecognized actuarial loss 2,000,000
Projected benefit obligation (15,000,000)
Prepaid/accrued benefit cost – debit P 1,700,000
During 2021, the entity determined that its current service cost was P2,000,000 and the interest cost is 10%. The expected return on plan assets was 10% but the actual return during the year was 12%. Past service cost and any actuarial gain or loss should be amortized over 10 years. Other related information is as follows:
Contribution to the plan P 2,400,000
Benefits paid to retirees during 2011 3,000,000
Decrease in accrued benefit obligation
due to changes in actuarial assumption 400,000
a. What should be reported in the income statement for the current year as employee benefit expense?
b. What is the projected benefit obligation on December 31, 2021?
c. What is the balance of the prepaid (accrued) benefit cost on December 31, 2021?
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