XYZ SA, a hypothetical company, off ers its employees a defi ned benefi t pension plan. Information on XYZ’s retirement plans is presented in Exhibit 2. It also grants stock options to executives. Exhibit 3 contains information on the volatility assumptions used to value stock options.EXHIBIT 2 XYZ SA Retirement Plan Information 2009Employer contributions 1,000Current service costs 200Past service costs 120Discount rate used to estimate plan liabilities 7.00%Benefi t obligation at beginning of year 42,000Benefi t obligation at end of year 41,720Actuarial loss due to increase in plan obligation 460(continued)736 International Financial Statement AnalysisPlan assets at beginning of year 39,000Plan assets at end of year 38,700Actual return on plan assets 2,700Expected rate of return on plan assets 8.00%EXHIBIT 3 XYZ SA Volatility Assumptions Used to Value StockOption GrantsGrant Year Weighted Average Expected Volatility2009 valuation assumptions2005–2009 21.50%2008 valuation assumptions2004–2008 23.00%Th e amount of periodic pension cost that would be reported in P&L under IFRS is closestto:A . 20.B . 530.C . 1,020.
XYZ SA, a hypothetical company, off ers its employees a defi ned benefi t pension plan. Information on XYZ’s retirement plans is presented in Exhibit 2. It also grants stock options to executives. Exhibit 3 contains information on the volatility assumptions used to value stock options.
EXHIBIT 2 XYZ SA Retirement Plan Information 2009
Employer contributions 1,000
Current service costs 200
Past service costs 120
Discount rate used to estimate plan liabilities 7.00%
Benefi t obligation at beginning of year 42,000
Benefi t obligation at end of year 41,720
Actuarial loss due to increase in plan obligation 460
(continued)
736 International Financial Statement Analysis
Plan assets at beginning of year 39,000
Plan assets at end of year 38,700
Actual return on plan assets 2,700
Expected
EXHIBIT 3 XYZ SA Volatility Assumptions Used to Value Stock
Option Grants
Grant Year Weighted Average Expected Volatility
2009 valuation assumptions
2005–2009 21.50%
2008 valuation assumptions
2004–2008 23.00%
Th e amount of periodic pension cost that would be reported in P&L under IFRS is closest
to:
A . 20.
B . 530.
C . 1,020.
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