Quiz 1

Due Feb 2 at 8:55am Points 25 Questions 24 Available until Feb 2 at 8:55am

Time Limit 80 Minutes

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This quiz was locked Feb 2 at 8:55am.

Attempt History
Attempt Time Score
LATEST Attempt 1 79 minutes 13 out of 25

Score for this quiz: 13 out of 25

Submitted Feb 2 at 8:55am
This attempt took 79 minutes.

Question 1 2 / 2 pts

Identify where should the items on the left side recognized in the statement of comprehensive
income by selecting an appropriate answer on the left side.

Correct! Current service cost Profit or loss

Correct! Benefits paid to members

Neither profit or loss nor othe

Correct! Current period actuarial gains in Other comprehensive income

relation to the defined benefit
obligation

Correct! Net interest on the net the net defined Profit or loss
benefit liability (asset)

Correct! Return on plan assets excluding Other comprehensive income

amounts recognized in net interest

Correct! Contributions paid

Neither profit or loss nor othe
 Other Incorrect Match Options:
Both profit or loss and other comprehensive income
Partly profit or loss and partly other comprehensive income

Question 2 1 / 1 pts

Which of the following statements is incorrect concerning the recognition and measurement of a
defined contribution plan?

The contribution shall be recognized as an expense in the period it is payable.

Any unpaid contribution at the end of the period shall be recognized as accrued liability.

Any excess contribution shall be recognized as prepaid expense but only to the extent that the
prepayment will lead to a reduction in future payments or a cash refund.

Correct!
An entity is not required but only encourged to disclose the amount recognized as expense for a defined
contribution plan.

Question 3 1 / 1 pts

A pension liability is reported when

the accumulated benefit obligation is less than the fair value of pension plan assets.

accumulated other comprehensive income exceeds the fair value of pension plan assets.

accumulated other comprehensive income exceeds the fair value of pension plan assets.

Correct! the defined benefit obligation exceeds the fair value of pension plan assets.

Question 4 1 / 1 pts

Which of these events will not cause a change in a defined benefit obligation?

Change in mortality rate or the proportion of employees taking early retirement.

Change in the estimated salaries or benefits that will occur in the future.

Correct! Change in the return on plan assets.

Change in the estimated employee turnover.

Question 5 1 / 1 pts
 Plan assets are assets held by long-term benefit fun and must satisfy all of the following conditions,
except

Correct!
The assets in the fund can be returned to the entity even if the remaining assets are insufficient to meet all
employee benefit obligation.

The assets in the fund are not available to the reporting entity's own creditors.

The assets are held by an entity, the fund itself, that is legally separate from the reporting entity.

The assets in the fund are available to pay only employee benefits.

Question 6 1 / 1 pts

Which of the following is not a characteristic of short-term employee benefits?

Short-term employee benefits by definition are payable no later than twelve months after year-end.

Correct! Short-term employee benefit obligations are measured on a discounted basis.

No actuarial assumptions are required to measure the benefit obligation.

There is no possibility of any actuarial gain or loss.

Question 7 1 / 1 pts

A profit-sharing plan requires an entity to pay a specified proportion of the cumulative profit for a five-
year period to employees who serve throughout the five-year period. What is the profit-sharing plan?

post-employment benefit

short-term employee benefit

termination benefit

Correct! other long-term employee benefit

Question 8 1 / 1 pts

What is the transitional effect of the application of PAS 19R on unamortized past service cost and
unrecognized actuarial gain or loss?

Unamortized past service cost and actuarial gain or loss are recognized currently in other comprehensive
income.
 Unamortized past service cost is recognized retrospectively in retained earning and actuarial gain ang
loss are recognized currently in profit or loss.

Unamortized past service cost and actuarial gain or loss are recognized currently in profit or loss.

Correct!
Unamortized past service cost and actuarial gain or loss are recognized retrospectively in retained
earnings.

Question 9 1 / 1 pts

On December 31, 2020, an entity paid P2,400,000 contribution to a defined contribution plan. Of this
amount, P1,656,000 is in part exchange for services performed by employees for 2020, and the
balance is in respect of services to be performed in 2021.

Determine the amount of any accrued or prepaid benefit expense as of December 31, 2020.

Note: An accrued benefit expense is denoted as a negative amount, whereas a prepaid benefit
expense is denoted as a positive amount.

Correct!
744,000

Correct Answers 744,000 (with margin: 0)

Question 10 1 / 1 pts

At the beginning of the current year, an entity announced the decision to close the factory located in
Visayas and terminate all 250 employees as a result of economic downturn. The entity shall pay
P30,000 per employee upon termination. However, to ensure that the windup of the factory occurs
smoothly and all remaining customer orders are completed, the entity needs to retain at least 25% of
employee until closure of the factory in eight months.

As a result, the entity announced that employees who agree to stay until the closing of the factory
shall receive P69,000 payment at the end of eight months in addition to receiving their current wage
throughout the period of closure instead of the P30,000. Based on this offer, the entity expected to
retain 75 employees until the factory is closed. What amount should be reported as termination
benefit?

Correct!
7,500,000

Correct Answers 7,500,000 (with margin: 0)

Question 11 1 / 1 pts

A profit sharing bonus plan requires an entity to pay 11% of income for the year to employees who
serve throughout the current year and who will continue to serve throughout the following year.

The entity reported income of P69,720,000 for 2020. The entity expects to save 4% of the maximum
possible bonus payment through staff turnover. The bonus will be paid on December 31, 2021.

How much is the liability for bonuses as of December 31, 2020?

 Correct!
7,362,432

Correct Answers 7,362,432 (with margin: 0)

Use the following information for the next two questions:

Aquamarine Beach Club, Inc. has a plan to compensate its employees for certain absences. Each
employee can receive five days’ sick leave each year plus 10 days’ vacation. The benefits carry over
for two additional years, after which the provision lapses on a FIFO flow basis. Thus, the maximum
accumulation is 45 days. In some cases, the company permits vacations to be taken before they are
earned. Payments are made based on current compensation levels, not on the level in effect when
the absence time was earned.

Days Daily Rate New Daily Days

Days Days Taken
Employee Accrued 12/31/2019 Rate Accrued
Earned 2020 2020
12/31/2019 (P) 1/1/2020 (P) 12/31/2020
Capri 20 680 700 15 13 22
Emma 15 740 760 15 15 15
Jake 25 620 640* 7 32 0
Jojo -5 560 580 15 20 -10
Leonard 40 780 820 15 5 50
Sara Hired July 1 600 600 8 2 6

*Terminated, June 15

Based on the information above, answer the following:

1. How much is the sick and vacation pay expense?

2. How much is the liability for compensated absences?

Question 12 0 / 1 pts

Based on the information on Aquamarine Beach Club, Inc., how much is the sick and vacation pay
expense?

You Answered
57,300

Correct Answers 50,780 (with margin: 0)

Question 13 0 / 1 pts

Based on the information on Aquamarine Beach Club, Inc., how much is the liability for compensated
absences?

You Answered
65,600

Correct Answers 61,500 (with margin: 0)

 Use the following information for the next two items:

The following information were taken from the memorandum records in relation to Raymond
Corporation's defined benefit plan:

DEFINED BENEFIT OBLIGATION

Debit Credit

Balance forwarded 325,000

Service cost 20,000

Interest expense 26,000

Benefits paid 15,000

Liability loss 43,500

PLAN ASSETS

Debit Credit

Balance forwarded 205,000

Interest revenue 16,400

Contributions 41,000

Benefits paid 15,000

Asset gain 1,600

Based on the information above, answer the following:

1. What is the discount rate used during 2020?

2. What is the defined benefit cost for 2020?

Question 14 1 / 1 pts

Based on the information on Raymond Corporation, what is the discount rate used during 2020?

Note: Place your answers in DECIMAL FORM, and in two decimal places.

Correct!
0.08

Correct Answers 0.08 (with margin: 0)

Question 15 0 / 1 pts

Based on the information on Raymond Corporation, what is the defined benefit cost for 2020?

You Answered
28,000

Correct Answers 71,500 (with margin: 0)

 Use the following information for the next three items:

Claire Company provides a defined benefit plan in which employees receive a lump sum post‐
employment benefits payable on termination of service and determined as 2% of their final year
salary for every year of service. Salaries are expected to increase by 4% (compound) each year. The
accountant has determined that the appropriate discount rate is 11% p.a. Brian commenced working
for Clair Company on January 1, 2019 with an annual salary of P650,000 and is expected to retire on
December 31, 2025.

Note: Round off future value and present value factors to three places (e.g. X.XXX). Round off
amounts to the nearest peso.

Based on the information above, and applying the projected unit credit method, answer the following:

1. Compute the current service cost for 2020.

2. Compute the interest expense for 2021.
3. Determine the present value of the defined benefit obligation on December 31, 2022.

Question 16 0 / 1 pts

Based on the information on Claire Company, compute the current service cost for 2020.

You Answered
9,382

Correct Answers 10,554 (with margin: 1)

Question 17 0 / 1 pts

Based on the information on Claire Company, compute the interest expense for 2021.

You Answered
1,032

Correct Answers 2,323 (with margin: 1)

Question 18 0 / 1 pts

Based on the information on Claire Company, determine the net present value of the defined benefit
obligation on December 31, 2022.

You Answered
47,463

Correct Answers 52,052 (with margin: 1)

 Use the following information for the next three items.

Hailey Corporation provided the following information in relation a defined benefit plan:

Fair value of plan assets, January 1 P5,250,000

Projected benefit obligation, January 1 3,500,000

Asset ceiling, January 1 1,225,000

Asset ceiling, December 31 900,000

Current service cost 1,575,000

Actual return on plan assets 600,000

Contribution to the plan 2,100,000

Past service cost 400,000

Increase in PBO due to change in actuarial assumptions 875,000

Discount rate 12%

Based on the information above, answer the following:

1. Determine the employee benefit expense

2. Determine the net remeasurement gain or loss.
3. Determine the net adjustment to prepaid/accrued benefit cost.

Question 19 0 / 1 pts

Based on the information on Hailey Corporation, determine the net remeasurement gain or loss.

Note: A gain is denoted as a positive amount, while a loss is denoted by a negative amount.

You Answered
-905,000

Correct Answers -597,000 (with margin: 0)

Question 20 0 / 1 pts

Based on the information on Hailey Corporation, determine the employee benefit expense.

You Answered
1,765,000

Correct Answers 1,828,000 (with margin: 0)

Question 21 0 / 1 pts

Based on the information on Hailey Corporation, determine the net adjustment to the
prepaid/accrued benefit cost account.
 Note: A debit adjustment is denoted as a positive amount, while a credit adjustment is denoted by a
negative amount.

You Answered
1,180,000

Correct Answers -325,000 (with margin: 0)

Use the following information for the next three items:

Last Splash, Inc. provided the following information for the current year:

Current service cost P 1,000,000

Interest expense on projected benefit obligation 900,000

Interest income on plan assets 550,000

Gain on plan settlement before normal retirement date 350,000

Payments for benefit obligation settled in advance 1,150,000

Past service cost during the year 400,000

Actual return on plan assets 750,000

Actuarial loss on projected benefit obligation during the year 500,000

Contribution to the plan 1,800,000

Benefits paid to retirees 1,200,000

Discount or settlement rate 8%

Based on the information above, answer the following:

1. What is the fair value of plan assets at yearend?

2. What is the projected benefit cost at yearend?
3. What amount should be reported as prepaid/accrued benefit cost at yearend?

Question 22 0 / 1 pts

Based on the information on Last Splash, Inc., what amount should be reported as prepaid/accrued
benefit cost at yearend?

Note: A prepaid benefit cost is denoted as a positive amount, while an accrued benefit cost is
denoted by a negative amount.

You Answered
1,400,000

Correct Answers -4,275,000 (with margin: 0)

Question 23 0 / 1 pts

Based on the information on Last Splash, Inc., what is the projected benefit obligation at yearend?
You Answered
11,250,000

Correct Answers 11,350,000 (with margin: 0)

Question 24 0 / 1 pts

Based on the information on Last Splash, Inc., what is the fair value of plan assets at yearend?

You Answered
6,875,000

Correct Answers 7,075,000 (with margin: 0)

Quiz Score: 13 out of 25