Caroni Ltd has a defined benefit pension plan for its employees. In 2016, the following actuarial report was received for the defined benefit plan: 2016/$ Present value of the defined benefit obligation 31 December 2015 10 000 000 Net interest ? Current service cost 1 150 000 Benefits paid 1 200 000 Actuarial gain/loss on DBO ? Present value of the defined benefit obligation 31 December 2016 10 750 000 Fair value of plan assets at 31 December 2015 9 500 000 Return on plan assets ? Contributions paid to the plan during the year 1 000 000 Benefits paid by the plan during the year 1 200 000 Fair value of plan assets at 31 December 2016 10 047 500 Additional information (a) All contributions received by the plan were paid by Caroni Ltd. (b) The interest rate used to measure the present value of the defined benefit obligation was 9% at 31 December 2015 and 31 December 2016. (c) The asset ceiling was nil at 31 December 2015 and 31 December 2016. Requirements: a) Determine the surplus or deficit of Caroni Ltd.’s defined benefit plan at 31 December 2016. b) Determine the net defined benefit asset or liability that should be recognized by Caroni Ltd at 31 December 2016 c) Calculate the net interest for 2016 d) Calculate the actuarial gain or loss for the defined benefit obligation for 2016 e) Calculate the return on plan assets, excluding any amount recognized in net interest for 2016 f) Prepare a pension worksheet for the period ended December 31 2016 (use the format in the picture attached ) g) Prepare the journal entries to account for the defined benefit pension plan in the books of Caroni Ltd for the year ended December 31 2016

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 7MC: Which of the following is not a component of pension expense? a. amount funded b. service cost c....

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Caroni Ltd has a defined benefit pension plan for its employees. In 2016, the following actuarial report was received for the defined benefit plan: 2016/$ Present value of the defined benefit obligation 31 December 2015 10 000 000 Net interest ? Current service cost 1 150 000 Benefits paid 1 200 000 Actuarial gain/loss on DBO ? Present value of the defined benefit obligation 31 December 2016 10 750 000 Fair value of plan assets at 31 December 2015 9 500 000 Return on plan assets ? Contributions paid to the plan during the year 1 000 000 Benefits paid by the plan during the year 1 200 000 Fair value of plan assets at 31 December 2016 10 047 500 Additional information (a) All contributions received by the plan were paid by Caroni Ltd. (b) The interest rate used to measure the present value of the defined benefit obligation was 9% at 31 December 2015 and 31 December 2016. (c) The asset ceiling was nil at 31 December 2015 and 31 December 2016. Requirements: a) Determine the surplus or deficit of Caroni Ltd.’s defined benefit plan at 31 December 2016. b) Determine the net defined benefit asset or liability that should be recognized by Caroni Ltd at 31 December 2016 c) Calculate the net interest for 2016 d) Calculate the actuarial gain or loss for the defined benefit obligation for 2016 e) Calculate the return on plan assets, excluding any amount recognized in net interest for 2016 f) Prepare a pension worksheet for the period ended December 31 2016 (use the format in the picture attached ) g) Prepare the journal entries to account for the defined benefit pension plan in the books of Caroni Ltd for the year ended December 31 2016

Pension Plan
Defined Benefit
Obligation
(DBO)
Company records
Plan Assets
Net defined
benefit balance
Annual pension
Cash
OCI
expense

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