Question

Stellar Inc. has a defined benefit plan for its employees. On December 31, 2019 the company’s records showed the following information related to the plan: Pension plan assets $835,000 Defined benefit obligation 933,000 All employees are expected to receive benefits under the plan. The company’s actuary provided the following information as at December 31, 2020: Current year service cost $178,000 Past service benefits, granted July 1, 2020 29,000 Discount rate 5% Actual return on assets 6% Contributions for the year 266,000 Benefits paid to retirees 124,000 Calculate pension expense for Stellar Inc. for 2020, assuming ASPE is used.

Pension expense, 2020 $__________________

Calculate pension expense for Stellar Inc. for 2020, assuming IFRS is used.

Pension expense, 2020 $__________________

Answer 1

	Pension expense	IFRS	ASPE
	Interest costs (PBO* discount rate)	46,650	46,650
	Add: Service costs (Given)	178,000	178,000
	Less: Return on plan of assets $ 192100*6%	11,526	11,526
	Less: Amort. of prior service costs Note 1	-        29,000	-
	Add: Amort. of actuarial gains ($50100- $ 11526) - Note 2	-	-
	Pension expense	207,176	236,176
1)	Service costs as per ASPE is a direct adjustment to equity
2)	Amortisation of actuarial gains/ losses will be accounted at Other comprehensive income under ASPE
sine the amortisation rule is not given , the gain of $ 38,574 ( $ 50,100- $ 11,526) under IFRS is not amortised
	Plan assets	IFRS	ASPE
	Funding (Given)	266,000	266,000
	Actual return ( $ 835000* 6%)	50,100	50,100
	Less: Payments to retired employees	-      124,000	- 124,000
	Plan assets	192,100	192,100