Reference no: EM132994919

Questions -

Q1. THE CASE OF ABC COMPANY - ABC Company grants its employees five (5) working days of paid sick leave for each year. Unused sick leave can be carried forward for one (1) calendar year only. On December 31, 2X16, the average unused sick leave of each of its 100 employees is two (2) days. The entity estimates that 80 of its employees will take no more than five-day sick leave during 2X17 and that the remaining 20 employees will take an average of seven (7) days sick leave during 2X17. An employee earns an average daily rate of P500.

Required -

1. Compute the amount of liability for compensated absences that ABC Company shall recognize on December 31, 2X16.

2. Prepare the required journal entry for December 31, 2X16.

Q2. THE GO COMPANY - The record of Go Company for its defined benefit plan shows the following balances:

Plan assets, January 1, 2X16 5,000,000

Defined benefit obligation, January 1, 2X16 5,800,000

2X16 information: Current service cost 800,000

Discount rate 10%

Contributions made 1,850,000

Benefits paid 440,000

Past service cost as a result of a plan amendment 2,800,000

Plan assets, at fair value, December 31, 2X16 7,710,000

Defined benefit obligation, remeasured at December 31, 2X16 9,600,000

Required - Using defined benefit plan worksheet, compute for the following

1. Retirement benefit expense to be reported in profit or loss section;

2. Remeasurement of defined benefit liability (net actuarial gain) in other comprehensive income; and

3. Defined benefit liability in statement of financial position.