Pensions Accounting Tutorial: Questions

1. Prima Ballerina plc have a 31 December year end. The company contributes to a defined
benefit pension plan for which the following information is relevant:

Expected return on plan assets 12% p.a.

Discount rate 10% p.a.
Present value of obligation at the start of 20X1 £1m
Fair value of plan assets at the start of 20X1 £1m

2016 2017 2018

£000 £000 £000
Current Service cost 260 280 280
Benefits Paid out 225 260 280
Contributions paid into scheme 205 225 225
Present value of obligation at year end 2,230 2,980 3,160
Market value of plan assets at year end 2,325 2,700 3,000

In 2017, the plan was amended to provide additional benefits with effect from 1
January 2017. The present value as at 1 January 2017 of additional benefits for
employee service before the 1 January 2017 was £20,000.
Any pension scheme asset will be recovered through reduced contributions in the
future. The average remaining working lives of employees is 10 years.

Required:
Show the Statement of Profit & Loss (Income Statement) and Statement of Financial
Position (Balance Sheet) extracts for the years ended 31 December 2016 to 2018 in
accordance with the requirements of IAS 19 (2013).