p Complete the following tables by indicating whether the following events increase (I), decrease (D), or have no effect (NE) on theemployer's defined benefit obligation, the pension plan assets, the pension plan's surplus, the pension expense, and theremeasurement gain-OCI.(a)Assume that the company applies IFRS and has a significant plan surplus and current period remeasurement gain prior to the followingevents in the current year:Current service costActual return on plan assets is > interest/discount rate of returnReturn on plan assets at the interest/discount ratePast service costs due to plan revisionLiability actuarial gainLiability actuarial lossEmployer contributions on last day of fiscal yearBenefits paid to retirees on last day of fiscal yearAn increase in the average life expectancy of employeesDefinedBenefitPensionPlanPlanObligationAssetsSurpli

Defined Benefit Obligation:Increases: Current service cost, past service costs, increase in employee…

Answered: Complete the following tables by…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 41RSCQ

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Net interest cost is a component of pension expense under IFRS. How is net interest cost calculated? Select one: O a. The increase in the DBO over the period, net of the increase in the plan assets over the period. O b. Interest expense on the DBO, net of actual interest income earned on plan assets. O c. Interest expense on the defined benefit obligation (DBO), net of expected interest income earned on plan assets. O d. The increase in the DBO over the period, net of the increase in the plan assets over the period.
The net pension liability (PBO minus plan assets) is increased by: A. Service cost. B. Expected return on plan assets. C. Amortization of prior service cost. D. Cash contributions to plan assets.
Describe how pension expense is a composite of periodic changes that occur in both the pension obligation and the plan assets.
The return on plan assets is the increase in plan assets (at fair value), adjusted for contributions to the plan and benefits paid during the period. How is the return included in the calculation of the periodic pension expense?
Indicate by letter whether each of the events listed below increases (I), decreases (D), or has no effect (N) on an employer's periodic pension expense in the year the event occurs. Events 1. Interest cost. _____ 2. Amortization of prior service cost---AOCI. ______ 3.Excess of the expected return on plan assets over the actual return _____ 4. Expected return on plan assets. _____ 5. A plan amendment that increases benefits is made retroactive to prior years. ____ 6. Actuary's estimate of the PBO is increased.…
Any past service costs should be included in the a) pension expense of past periods. b) pension expense of the current period. c) pension expense of current and future periods. d) plan assets.
b. How does each component of pension expense affect pension expense during the period (increase, decrease, or uncertain)? c. What is the difference between the accumulated pension obligation and the projected pension obligation? d. What determines whether a pension plan is underfunded or overfunded?
look over the three most important components of the pension expense. The treatment of expected and actual return on plan assets, particularly when the actual return is greater than the expected, the amortization of prior service cost and the unexpected gain/ loss. Discuss the accounting treatment of these items with suitable examples.
Under IFRS, any difference between the pension expense and the payments into the pension fund plan assets should be reflected in Select one: a. a contra account to the net defined benefit liability/asset. b. an accrued actuarial liability. c. the net pension liability/asset. d. a note to the financial statements only. e. None of the above.
Describe what factors contribute to the pension benefit obligation. Discuss the effect of the increase or decrease on the PBO. How is this change reported in the financial statements and what other accounts are affected? Provide an example from a publicly-traded company.
Explain the following terms. Include the definition, how they are calculated, treated in the accounting records (general ledger) and shown in the financial statements. Defined Benefit Obligation Plan Assets Pension Asset/Liability Pension Expense Other Comprehensive Income (OCI) gain/loss
For a defined benefit pension plan, pension expense consists of five components, for which the formula is Service Cost – Interest Cost + Expected Return on Plan Assets – Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost + Interest Cost – Expected Return on Plan Assets + Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost + Interest Cost + Expected Return on Plan Assets – Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost – Interest Cost + Expected Return on Plan Assets + Amortization of Prior Service Cost +(–) Gain (Loss).

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