f Net defined benefit liability/asset: Underfunding see entry d 200,000 Reconciled with the memorandum records: Defined benefit obligation P4,050,000 6-5... Orange Gem Company a Work
Trang 1CHAPTER 6 EMPLOYEE BENEFITS PROBLEMS
6 – 1 (Red Hot Company)
(a) Beginning liability for compensated absences
(b) Employee Benefit Expense for Sick Leave and Vacation Leave
10 x 420 4,200
(c) Liability for Compensated Absences 2,520
Employee Benefit Expense – Compensated Absences 10,280
Total amount paid for compensated absences
Vacation leave 7 x 450 3,150
3 x 420 1,260
1 x 380 380 4,790 12,800
(d) Employee Benefit Expense – Compensated Absences 10,870
Liability for Compensated Absences, 12/31/12
6-2 (Green Grass Company)
(a) Total payment in 2012
Liability, beginning of 2012 (13-10) x 20 x 450) (27,000) Liability, end of 2012 (12 – 10) x 40 x 450) 36,000
(b) P36,000 (see above)
Trang 2(c) Liability for Compensated Absences 27,000
Compensated Absences 301,500
Liability for Compensated Absences 36,000 6-3 (Blue Jeans Company)
(a) Retirement Benefit Expense = Required Contribution
= (P6,000,000 x 8%) + (35,000,000 - P10,000,000)5% =P1,730,000 (b) 1 Retirement Benefit Expense 1,730,000
Prepaid Retirement Benefit Cost 70,000
2 Retirement Benefit Expense 1,730,000
Accrued Retirement Benefit Cost 230,000
6-4 (Yellow Ribbon Trading)
Profit or Loss
Other Comprehensive
Interest cost
Actuarial gain or loss
Plan assets
Ending balances 1,040,000 60,000 4,050,000 3,450,000 (a) Net Prepaid/Accrued Benefit Cost, December 31, 2012
P3,000,000 – P2,600,000 = P 400,000
Trang 3(f) Net defined benefit liability/asset:
Underfunding (see entry d) 200,000
Reconciled with the memorandum records:
Defined benefit obligation P4,050,000
6-5 (Midnight Black)
Profit or Loss
Other Comprehensive
Interest cost
Actuarial loss
Balances, end 2,309,000 52,000 3,701,500 3,600,500 (a) Retirement Benefit Expense 2,309,000
Remeasurement of Defined Benefit
Defined Benefit Liability/Asset 1,000 (b) Defined benefit liability , end
Beginning balance (1,350,000 – 1,250,000) P100,000
Defined benefit liability, end P101,000
Trang 46-6 Brown Cup
Profit or Loss
Other Comprehensive
Interest cost
Actuarial gain or loss
On Plan Assets
Ending balances 1,170,000 30,000 10,180,000 10,780,000
*Squeezed (a) P8,200,000 – P8,500,000 = P300,000 asset (b) Actuarial gain or loss
On plan assets 780,000 – 850,000 = 70,000 loss
On benefit obligation (squeezed, see above) = 40,000 gain (c) Defined Benefit Cost
(d) Retirement Benefit Expense 1,170,000
Remeasurement of Defined Benefit Asset/Liability – OCI 30,000
Defined Benefit Liability/Asset 1,200,000 Defined Benefit Liability/Asset 1,500,000
(e) Defined Benefit Asset:
Overfunding (1,500,000 – 1,200,000) 300,000
(f) Remeasurement of Defined Benefit
Asset/Liability – OCI 50,000
Defined Benefit Asset/Liability 50,000
Trang 5(b) Actual return P 550,000
Expected return based on interest rate of 10%
Actuarial gain taken to OCI P 90,000 6-8 (Orange Gem Company)
(a) Worksheet
Profit or Loss
Other Comprehensive
Interest cost
Actuarial gain/loss
Plan assets
*squeezed (b) Retirement Benefit Expense 1,900,000
Remeasurement of Defined Benefit Liability/Asset – OCI 110,000
Defined Benefit Liability/Asset 2,010,000 Defined Benefit Liability/Asset 2,000,000
(c) Defined Benefit Liability/Asset, Dec 31, 2013
Beginning balance (9,000,000 – 8,000,000) P1,000,000 Underfunding (2,010,000 – 2,000,000) 10,000 Defined benefit liability, Dec 31, 2013 P1,010,000
Trang 6MULTIPLE CHOICE QUESTIONS Theory
Problems
263,000 – 204,000 = 59,000 underfunding; 200,000 beg Liability + 50,000 = 259,000
profit or loss
6,710,000
= 1,160,000; 1,160,000 – 750,000 = 410,000 underfunding
=1,610,000
425,000 – 390,000) = 8,500 Actuarial gain on benefit obligation = 32,500 + 8,500 = 41,000 Service cost = 5,629,000 – (4,600,000 + 460,000 - 41,000 – 390,000)
=1,000,000 (or prepare worksheet and squeeze)
the underfunding arises from past service cost.)