Reference no: EM132523424

Question 1 - Tata Steel Corporation has provided the following information regarding their defined benefit pension plan for the year 2018:

Current service cost $ 235,000

Contribution to the plan 262,500

Past service cost, effective December 31, 2018 50,000

Actual return on plan assets 160,000

Benefits paid 100,000

Net defined benefit liability at January 1, 2018 400,000

Plan assets at January 1, 2018 1, 600,000

Defined benefit obligation at January 1, 2018 2,000,000

Interest/discount rate on the DBO and plan assets 10%

In addition, Tata Steel follows IFRS.

Required:

1) arrange continuity schedule for 2018 for the defined benefit obligation.

2) arrange continuity schedule for 2018 for the plan assets.

3) Calculate pension expense for the year 2018.

4) arrange all pension journal entries recorded by Tata Steel in 2018.

Problem : What pension amount will appear on Tata Steel's statement of financial position at December 31, 2018?

Question 2 - MedPlus Ltd. initiated a one-person pension plan in January 2012 that promises the employee a pension on retirement according to the following formula: pension benefit = 2.5% of final salary per year of service after the plan initiation. The employee began employment with MedPlus early in 2009 at age 33, and expects to retire at the end of 2035, the year in which he turns 60.

His life expectancy at that time is 21 years. Assume that this employee earned an annual salary of $40,000 when he joined MedPlus, that his salary was expected to increase at a rate of 4% per year, and that this remains a reasonable assumption to date. MedPlus considers a discount rate of 6% to be appropriate.

Required:

Problem 1) What is the employee's expected final salary?

Problem 2) What amount of current service cost should MedPlus recognize in 2017 relative to this plan?

Problem 3) What is the amount of the accrued benefit obligation at December 31, 2017?