Question

In: Accounting

The following information relates to RED Co's postretirement health care benefits for the year 2019: Defined...

The following information relates to RED Co's postretirement health care benefits for the year 2019:

Defined post-retirement benefit obligation at January 1, 2019: $100,000

Plan assets, January 1, 2019: 50,000

Actual return on plan assets, 2019: 5,000

Service cost, 2019: 60,000

Plan funding during 2019: 20,000

Payments from plan to retirees during 2019: 8,000

Actuarial loss on defined post-retirement benefit obligation-2019 (end of year): 30,000

ABC Inc. follows IFRS. Discount rate is 10%

(a) Calculate the post-retirement benefit expense for 2019.

(b) Calculate the post-retirement benefit remeasurement gain or loss- other comprehensive income (OCI) for 2019.

(c) Determine the December 31, 2019 balance of the plan assets, the defined post-retirement benefit obligation, and the plan surplus or deficit.

(d) Determine the balance of the net post-retirement benefit liability/asset account on the December 31, 2019statement of financial position.

(e) Reconcile the plan surplus or deficit with the amount reported on the statement of financial position at December 31, 2019.

Solutions

Expert Solution

IAS 19R has eliminated corridor approach by requiring immediate recognition actuarial gains and losses through OCI


Related Solutions

Century-Fox Corporation's employees are eligible for postretirement health care benefits after both being employed at the...
Century-Fox Corporation's employees are eligible for postretirement health care benefits after both being employed at the end of the year in which age 60 is attained and having worked 20 years. Jason Snyder was hired at the end of 1998 by Century-Fox at age 33 and is expected to retire at the end of 2026 (age 61). His retirement is expected to span five years (unrealistically short in order to simplify calculations). The company's actuary has estimated the net cost...
Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to...
Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees’ health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability.
Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to...
Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this.  The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70.  The estimated cost of retired employees’ health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability Leases  Six ovens were rented...
Marko Inc. provides the following information related to its post-retirement health care benefits for the year...
Marko Inc. provides the following information related to its post-retirement health care benefits for the year 2018 (amounts in thousands of Canadian dollars): Defined post-retirement benefit obligation at January 1, 2018 - $100,000 Plan assets, January 1, 2018 - 40,000 Actual return on plan assets, 2018 - 3,000 Discount rate- 10% Service cost,2018 - 57,000 Plan funding during 2018 - 22,000 Payments from plan to retirees during 2018 - 6,000 Actuarial loss on defined post-retirement benefit obligation, 2018 (end of...
Data pertaining to the postretirement health care benefit plan of Sterling Properties include the following for...
Data pertaining to the postretirement health care benefit plan of Sterling Properties include the following for 2018: ($ in 000s) Service cost $ 146 Accumulated postretirement benefit obligation, January 1 1,200 Plan assets (fair value), January 1 80 Prior service cost–AOCI none Net gain–AOCI (2018 amortization, $1) 105 Retiree benefits paid (end of year) 93 Contribution to health care benefit fund (end of year) 225 Discount rate, 7% Return on plan assets (actual and expected), 10% Required: 1. Determine the...
The following information relates to ABC Ltd., for the year ended 31st December, 2019.
The following information relates to ABC Ltd., for the year ended 31st December, 2019.             Sales……………………………………………………………….. Rs.2,000,000.             EBID ………………………………………………………………. 40% of sales.             Ordinary Shares capital of par value Rs.10/each……………… Rs.800,000.             8% Preference shares Capital of par value Rs.100/ each………. Rs.500,000.             10% Bonds payable of par value Rs.1000/each…………………. Rs.400,000.             Reserves and surplus………………………………………………Rs.250,000.             Current liabilities…………………………………………………..Rs.250,000. Tax rate is 30%.             Market price of share is Rs.20 each.             Dividend payout ratio is 60%. Required; Compute and comments on each of the following ratios a)Earning per...
The following information relates to Egoly Ltd for the year ended 30th June 2019: EGOLY LTD...
The following information relates to Egoly Ltd for the year ended 30th June 2019: EGOLY LTD BALANCE SHEET AS AT 30th JUNE 2019 2019 2018 $ $ ASSETS Current Assets    Cash at bank 67,710 59,666    Accounts receivable 252,760 283,290    Inventory 1,107,600 951,400    Prepaid expenses 113,600 35,500 Total current assets 1,541,670 1,329,856 Non-current assets    Equipment 1,263,800 823,600    Accumulated depreciation – equipment (238,560) (143,136) Total non-current assets 1,025,240 680,464 TOTAL ASSETS 2,566,910 2,010,320 LIABILITIES & SHAREHOLDERS...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a single employee is covered by the plan. That employee has worked for Kraemerica since 1-1-2014 and she has earned pension benefits since 1-1-2014. Additional informa­tion is provided below.                   1)   Benefit formula: Upon retirement and upon reaching age 65, the employee will receive a pension payment annually (payments to be made as long as employee lives).                          The first check will be issued one...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a single employee is covered by the plan. That employee has worked for Kraemerica since 1-1-2014 and she has earned pension benefits since 1-1-2014. Additional informa­tion is provided below.                   1)   Benefit formula: Upon retirement and upon reaching age 65, the employee will receive a pension payment annually (payments to be made as long as employee lives).                          The first check will be issued one...
Problem 17-47 (LO. 5) The following information for 2019 relates to Sparrow Corporation, a calendar year,...
Problem 17-47 (LO. 5) The following information for 2019 relates to Sparrow Corporation, a calendar year, accrual method taxpayer: Net income per books (after-tax) $205,050 Federal income tax expense per books 55,650 Tax-exempt interest income 4,500 MACRS depreciation in excess of straight-line depreciation used for financial statement purposes 7,200 Excess of capital losses over capital gains 9,400 Nondeductible meals and entertainment 5,500 Interest on loan to purchase tax-exempt bonds 1,100 a. Regarding items that would be added back on the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT