Question

Spartan Limited is a publicly traded company on the Toronto Stock Exchange. The company
sponsors a defined benefit pension plan for all its employees, and the controller provides you with
the following data that relate to the plan for fiscal 2019:
1. On January 1, 2019, the company's defined benefit obligation was $1,050,000, and the fair
value of pension plan assets was $950,000.
2. The plan assets generated a return of $98,000 during the year, and Spartan's discount rate
was 10%.
3. The current service cost is determined using a formula based on the employees’ payroll
and was calculated to be $83,000.
4. Spartan made a cash contribution of $150,000 to the plan assets on December 31, 2019.
5. Benefits of $80,000 were paid in 2019. Assume these payments were made a year end.
6. In late December 2019, an actuarial revaluation of the defined benefit obligation
establishes that the defined benefit obligation should be 1,200,000.

Answer 1

Dr.	Defined Benfit Pension Plan A/c	Cr.
Particulars	Amount	Particulars	Amount
To Benefit Paid A/c	80000	By Balance B/d	1050000
		By Interest Cost A/c	105000
		By CSC A/c	83000
		By Actuary Loss A/c	42000
To Balance C/d	1200000
Total	1280000	Total	1280000
Dr.	Plan Assets A/c	Cr.
Particulars	Amount	Particulars	Amount
To Balance b/d	950000	By Benefit Paid A/c	80000
To Expected Return A/c	95000
To Contribution A/c	150000
To Actual Return A/c	98000	By Balance C/d	1213000
Total	1293000	Total	1293000
P and L A/c
CSC A/c	83000
Interest Cost A/c	105000
Plan Asset Expected Return A/c	-95000
Net To Be Charged to P and L A/c	93000
OCI A/c
Actuary Loss A/c	-42000
Actual Return A/c	98000
Net OCI Gain	56000
Financial Statement
DBO Balance	-1200000
Plan Assets A/c	1213000
Net DBO	13000