Pension plan IFRS

0 comments

Fudd’s Furniture Inc. sponsors a defined benefit pension plan for its employees.

As of January 1, 2019, the following balances are reported:

Defined benefit obligation$ 240,000

Plan assets (at fair value) 310,000

SFP, Accumulated OCI loss5,000

Information for the 2019 years is as follows:

  • Current service cost $51,000
  • Plan amendment resulting in a past service cost increase$8,700
  • Expected rate of return based on the long-term bond rate8%
  • Actual return on plan assets$25,000
  • Contributions to the benefit fund paid on Sept 30 $65,000
  • Benefits to retired employees during the year$120,000
  • Changes in actuarial assumptions resulted in an
  • Fudd’s asset ceiling limit is $85,000

decrease in the defined benefit obligation$ 3,200

Required:

  • Calculate the Net Defined Pension Liability/Asset final balance for December 31, 2019 independently using the individual elements of pension accounting. [7 marks]
  • Prepare all necessary the pension journal entries for 2019. [5 marks]
  • Calculate the balance in Accumulated OCI [1 mark]
  • Discuss the long-term financial implications any organization of underfunding it’s pension plan.[2 marks]

About the Author

Follow me


{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}