BAIACC3X – Intermediate Accounting 3
M. Manayao, CPA, MBA
Quiz 01
Name: _______________________________________________________________
Score: ______________________
C/Y/S: _______________________________________________________________
Date: ______________________
GENERAL DIRECTIONS:
1. Strictly no erasures allowed. Any form of erasures or alterations will invalidate your answer.
2. Write legibly and in-non red ink.
3. Cheating or its equivalent in whatever form, manner, or method shall not be allowed nor
tolerated.
4. Review your answers carefully and meticulously.
Problem A
Information on ABC Company defined benefit plan is shown as follows:
Present value of defined benefit obligation, beginning
Current service cost
Benefits paid to retirees
Decrease in PVDBO due to changes in actuarial assumptions
Discount rate
120,000
30,000
50,000
10,000
10%
What is the year-end balance of present value of defined benefit obligation?
Present value of defined benefit obligation, beginning
Current service cost
Benefits paid to retirees
Decrease in PVDBO due to changes in actuarial assumptions
Interest expense (120,000 x 10%)
Defined benefit obligation – ending
120,000
30,000
(50,000)
(10,000)
12,000
102,000
Problem B
DEF Company provided the following information of their defined benefit plan:
Defined benefit obligation, beginning
120,000
Defined benefit obligation, ending
122,000
Benefits paid
50,000
Increase in DBO due to changes in actuarial assumptions
10,000
Discount rate
10%
What would be the current service cost?
Defined benefit obligation, beginning
Current service cost
Benefits paid
Increase in DBO due to changes in actuarial assumptions
Interest expense (120,000 x 10%)
Defined benefit obligation, ending
120,000
30,000
(50,000)
10,000
12,000
122,000
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Problem C
GHI Company memorandum records for the year 2022 in relation to a defined benefit plan showed the
following:
Fair value of plan assets, 01/01/2022
Defined benefit obligation, 01/01/2022
During the year, the following transactions are gathered:
Current service cost
Past service cost
Actual return on plan assets
Contributions to the plan
Benefits paid to retirees
Remeasurement loss on defined benefit obligation
Discount rate
1.
How much is the employee benefits expense for the year 2022?
Current service cost
1,200,000
Past service cost
300,000
Interest expense
700,000
Interest income
(500,000)
Employee benefit expense
1,700,000
2.
How much is the net remeasurement loss or gain for 2022?
Actual return
800,000
Less: Interest income
(500,000)
Remeasurement gain – FVPA
300,000
Actuarial loss – DBO
(900,000)
Net Remeasurement Loss
(600,000)
3.
What is the defined benefit obligation on December 31, 2022?
Defined benefit obligation, beginning
Current service cost
Past Service Cost
Interest expense
Actuarial loss
Benefits paid
Defined benefit obligation, ending
5,000,000
7,000,000
1,200,000
300,000
800,000
1,000,000
500,000
900,000
10%
7,000,000
1,200,000
300,000
700,000
900,000
(500,000)
9,600,000
4.
What is the fair value of plan assets on December 31, 2022?
Fair value of plan assets, beginning
5,000,000
Actual return
800,000
Contributions to the plan
1,000,000
Benefits paid
(500,000)
Fair value of plan assets, ending
6,300,000
5.
How much is the retirement liability at year-end?
Fair value of plan assets
6,300,000
Defined benefit obligation
(9,600,000)
Prepaid/Accrued Benefit Cost
(3,300,000)
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(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph
Problem D
ADHERE TO STICK Co. grants its managerial employees bonus in the form of profit sharing. Information
on operations in 20x1 is shown below:
Profit before tax
Bonus rate or percentage
Income tax rate
₱4,000,000
10%
30%
1. How much is the bonus “before bonus and before tax?”
B = P x Br
B = 4,000,000 x 10%
B = 400,000
2. How much is the bonus “after bonus and before tax?”
P
B
= P 1 + Br
4,000,000
B = 4,000,000 1 + 10%
B = 4,000,000 - 3,636,364
B = 363,636
3. How much is the bonus “before bonus and after tax?”
1 - Tr
B = P x
1/Br - Tr
1 - 30%
B = 4,000,000 x
1/10% - 30%
70%
B = 4,000,000 x
10 - 30%
70%
B = 4,000,000 x
9.7
B = 288,660
4. How much is the bonus “after bonus and after tax?”
1 – Tr
B = P X
1/Br - Tr + 1
70%
B = 4,000,000 x
10 - 30% + 1
70%
B = 4,000,000 x
10.7
B = 261,682
Problem E
1. It refers to a plan where plan assets, if any, are retained and managed by the employer.
a. Funded plan
c. Unfunded plan
b. Non-contributory plan
d. Delicate plan
2. These are pool of assets contributed by various unrelated employers to be used to pay retirement
benefits to participants without regard to the identity of the contributing employers.
a. Multi-employer plans
c. Pooling of assets plan
b. State plans
d. Secret plan
3. Multi-employer plans are treated as
a. Defined contribution plan
c. Hybrid plan
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b. Defined benefit plan
d. a or b
4. The accounting for defined contribution plan
a. is straightforward – actuarial computations are not required.
b. is complex – actuarial computations are required
c. is simple – not accounted for
d. is done only by CPAs
5. Under a defined contribution plan, the retirement benefits expense is
a. equal to an actuarially determined amount
b. equal to the agreed periodic contribution to the fund
c. equal to the contribution made during the period
d. zero, if no employee retired during the period
6. Employee benefits are all forms of consideration given by an entity in exchange for service rendered by
employees. Which of the following employee benefits is not within the scope of PAS 19?
a. Short-term
d. Termination
b. Post-employment
e. Share-based payments
c. Other long-term
7. Which of the following employee benefits is not within the scope of PAS 19?
a. Semi-monthly salaries of employees
b. Employer’s share in SSS contributions
c. One sack rice allowance
d. Bonus in the form the entity’s shares
8. These are changes in the present value of the defined benefit obligation resulting from experience
adjustments and the effects of changes in actuarial assumptions.
a. Past service cost
b. Actuarial gains and losses
c. Settlement gains and losses
d. Interest cost
9. It is the change in the present value of defined benefit liability due to the passage of time.
a. Return on plan asset
b. Service cost
c. Benefit liability
d. Interest on defined benefit liability
10. Accumulating compensated absences are those that
a. can be carried over to the next period if not fully used during the year of entitlement.
b. expire if not fully used during the year of entitlement.
c. can be carried over to the next period if not fully used during the year of entitlement and are paid
in cash when the employee leaves the company
d. are recognized only when actually taken by employees
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End
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SM Baliwag Complex, Dona Remedios Trinidad Highway, Brgy. Pagala, Baliwag, Bulacan
(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph