Reference no: EM132587529
Question - Shic Salon Supplies (SSS) provides its employees with post-retirement benefits that are held by a secure third party. Employees have different options within this plan and can take combinations of many choices of health care and wellness benefits. These benefits accrue through the life of the employee and are available upon retirement. The company moved away from ASPE and adopted the provisions of IAS 19 and assumes that all benefits will fully be taken upon retirement. The following balances relate to this plan on January 1, 2020:
Plan assets $2,712,000
Defined post-retirement benefit obligation $3,668,000
Past service costs -0-
As a result of the plan's operation during 2020, the following additional data were provided by the actuary.
- The service cost for 2020 was $273,000.
- The discount rate was 5%.
- Funding payments in 2020 were $234,000.
- The actual return on plan assets was $158,500.
- The benefits paid on behalf of retirees from the plan were $171,600.
Required -
1. Calculate the post-retirement benefit expense for 2020.
2. Prepare a continuity schedule for the defined post-retirement benefit obligation and for the plan assets from the beginning of the year to the end of 2020.
3. At December 31, 2020, prepare a schedule reconciling the plan's surplus or deficit with the post-retirement amount reported on the SFP.
4. If SSS had remained with ASPE instead of moving to IFRS, how would your answers to parts 1 to 3 change?
5. Explain in what ways, if any, the accounting requirements for this plan are different from the requirements for a defined benefit pension plan.