CAPÍTULO 2. CAMBIO DE ACTITUDES
3. Modelos Teóricos de la Persuasión
(b) Retirement Benefit Expense... 222,750 Net Retirement Benefit
Liability/Asset... 222,750
Remeasurement Loss (OCI)... 2,025 Net Retirement Benefit
Liability/Asset ... 2,025 Net Retirement Benefit
Liability/Asset... 47,250
Cash... 47,250
EXERCISE 19-18 (a) (Continued)
(a) Opsco Corp. Post-retirement Benefit Plan Worksheet - 2013
225,000 Cr. 1,822,500 Cr. 1,597,500 Dr.
Service cost 202,500
Remsmt. loss 2,025 Dr.
Contributions 47,250
Cr.
Benefits paid 90,000 Dr.
Expense entry 2,025 Dr. 222,750 Dr.
224,775 Cr.
Funding entry 47,250
Cr.
47,250 Dr.
Total 402,525 Cr. 2,099,025 Cr. 1,696,500 Dr.
Kieso, Weygandt, Warfield, Young, Wiecek, McConomy
Intermediate Accounting, Tenth Canadian Edition
EXERCISE 19-19 (10-15 minutes)
(a) Accrued post-retirement benefit obligation (Credit)
$(190,000)
Plan assets at fair value (Debit) 130,000
Funded status (Credit) (60,000
)
Unrecognized past service cost (Debit) * ( 11,000
Accrued Benefit Liability/Asset (Credit) $ (49,000 )
* $12,000 – $1,000 (amortization)
(b)
Defined post-retirement benefit obligation (Credit)
$(190,000)
Plan assets at fair value (Debit) 130,000 Funded status (Credit) and Net Defined Benefit
Liability/Asset (Credit) $ (60,000
)
EXERCISE 19-20 (25-35 minutes)
(a) Note A: Significant Accounting Policies Employee Benefit Plans
The company accrues its obligations under employee benefit plans and the related costs, net of plan assets, using the deferral and amortization approach. The company has adopted the following policies:
• The cost of pensions earned by employees is actuarially determined using the accrued benefit method prorated on service and management's best estimate of expected plan investment performance, salary escalation, retirement ages of employees.
• For the purpose of calculating the expected return on plan assets, those assets are valued at fair value.
• Past service costs from plan amendments are amortized on a straight-line basis over the average remaining service period of employees active at the date of amendment.
• The excess of the net actuarial gain (loss) over 10% of the greater of the benefit obligation and the fair value of plan assets is amortized over the average remaining service period of active employees. The average remaining service period of the active employees covered by the pension plan is 16 (assumed) years (2012) and 15 (assumed) years (2013).
Note X: The company sponsors a defined benefit pension plan covering the following group of employees and providing the following benefits.
As of December 31, 2013, the net expense for the company’s pension plan is $171,320 ($94,000 + $253,000 – $175,680).
The present value of the accrued benefit obligation at December 31, 2013, was $2,737,000 and the market related value of the fund assets was $2,278,329 based on the fair market value of the assets on that date. This results in an underfunded obligation of $458,671. Employer contributions during 2013 amounted to $92,329 and benefits paid
Kieso, Weygandt, Warfield, Young, Wiecek, McConomy
Intermediate Accounting, Tenth Canadian Edition
amounted to $140,000. At December 31, 2013, the accrued pension liability is $(412,991).
EXERCISE 19-20 (Continued)
Other information to be disclosed: assumptions that underlie the plan such as the discount rate, the rate of increase in compensation levels, and the expected long-term rate of return on plan assets.
(b)and (c)
Note A: Significant Accounting Policies Employee Benefit Plans
The company accrues its obligations under employee defined benefit plans and the related costs, net of plan assets, using the immediate recognition approach.
Note X: The company sponsors a defined benefit pension plan covering the following group of employees and providing the following benefits.
Information about the company’s defined benefit plan is as follows:
Defined benefit obligation:
Balance at beginning of year, therefore $2,530,000
Interest cost—given 253,000
Current service cost—given 94,000
Benefits paid—given (140,000 )
Balance at end of year—given $2,737,000
Plan assets:
Benefits paid—given (140,000 ) Fair value at end of year—given $2,278,329
Kieso, Weygandt, Warfield, Young, Wiecek, McConomy
Intermediate Accounting, Tenth Canadian Edition
EXERCISE 19-20 (Continued)
Net defined benefit (liability)/asset:
Defined benefit obligation $(2,737,000)
Plan assets at fair value 2,278,329 Funded status and
Net defined benefit (liability)/asset $(458,671 ) Pension expense:
Current service cost—given $ 94,000
Interest cost—given 253,000
Expected return on plan assets—given (175,680 )
Pension expense $ 171,320
Remeasurement (Gain) Loss - OCI:
Actuarial loss on fund assets:
$175,680 - $130,000 = $ 45,680
Remeasurement (Gain) Loss - OCI $ 45,680 Other information to be disclosed: assumptions that underlie the plan such as the discount rate, the rate of increase in compensation levels, what type of assets make up the pension fund assets, the dates of the most recent actuarial revaluations, etc.
EXERCISE 19-20 (Continued)
(c) The beginning balances of defined benefit obligation, and pension plan assets are shown in part (b) on the previous page.
Net defined benefit liability/(asset):
Defined benefit obligation, 1/1/13 $2,530,000 Plan assets at fair value, 1/1/13 2,196,000 Funded status liability/(asset) and
Net defined benefit liability/(asset), 1/1/13 $334,000 Alternatively,
Net defined benefit liability/(asset), 12/31/13 $458,671 Pension expense (171,320)
Employer contributions 92,329
Remeasurement Gain (Loss) - OCI (45,680) Net defined benefit liability/(asset), 1/1/13 $334,000
Kieso, Weygandt, Warfield, Young, Wiecek, McConomy
Intermediate Accounting, Tenth Canadian Edition
EXERCISE 19-21 (25-30 minutes)
(a) Past service costs under ASPE are amortized on a straight-line basis over the period the firm expects to realize the economic benefits from the change in the plan.
Calculation of Service-Years Employee
Expected Years of
Service Total
Brandon 3 3
Chiara 5 5
Mikayla 6 6
Angela 5 5
Paolo 4 4
Erminia 7 7
Total 30
Expected average remaining service life
= 30 6 employees = 5 years
Past service cost 2013 through 2017 = $340,000 5 = $68,000 Past service cost amortization would be complete at the end of 2017, therefore, there would be no amortization in 2018.
(b) Past service costs under IFRS are expensed immediately in net income. Therefore, the $340,000 of past service costs will be expensed immediately in 2013, resulting in no amortization in 2014 and beyond.
*EXERCISE 19-22 (25-30 minutes)
(a) The employee’s expected final salary in 2032 would be calculated as follows:
$40,000 X (1.04)26 = $110,899
(in 27 years there would be 26 raises)
(b) Step 1: Calculate annual pension benefit on retirement from working in 2014:
Annual pension benefits on retirement
= 2.5% X $110,899 X 1 year
= $2,772 per year of retirement
Step 2: Discount the present value of the annuity of $2,772