Reference no: EM132856292
Question - HOWARD CORP. sponsors a defined-benefit pension plan for its employees. On January 1, 2013, the following balances related to this plan prior to adoption of PAS 19R.
Debit Plan assets (fair value) P4,500,000
Credit Projected benefit obligation P6,000,000
Debit Past service cost 750,000
Credit Unrecognized actuarial gain 650,000
As a result of the operation of the plan during 2013, the actuary provided the following additional data at December 31, 2013.
Service cost for 2013 P750,000
Actual return on plan assets in 2013 450,000
Amortization of past service cost 200,000
Contributions in 2013 1,150,000
Benefits paid to retirees in 2013 700,000
Discount rate 7%
Expected return rate 8%
Increase in projected benefit obligation due to changes in actuarial assumptions 100,000
Effective January 1, 2013, Howard has applied the provisions of PAS 19R in relation to its defined-benefit pension plan.
Required -
1. What amount of "net re-measurement" should Howard recognize through other comprehensive income?
A. P100,000 loss B. P135,000 gain C. P35,000 gain D. P35,000 loss
2. What is the net amount of adjustment to the January 1, 2013 balance of Retained earnings when the transitional effect of adopting PAS 19R is recognized?
A. P100,000 credit B. P100,000 debit C. P35,000 credit D. P35,000 debit