QUESTIONS-EMPLOYEES BENEFIT-2
1 Define Post-employment benefits
2 Give examples of Post-employment benefits
3 What are the two main category of Post-
employment benefits?
Differentiate the two categories.
4 What is the republic act number that provide
specific level of benefit for every year of
service?
5 What are the 4 characteristics of Defined
Benefit Plan? |Differentiate each.
6 How are Defined Contribution plan accounted
for?
Post-employment benefits are benefits given
by an employer after completion of
employment
Examples of post-employment benefits are:
1. Retirement benefits or pensions
2. Post- employment life insurance
3. Post-employment Medical care.
1. DEFINED BENEFIT PLAN
2. DEFINED CONTRIBUTION PLAN
- Defined benefit plan
1. The employee is guaranteed with
specific benefits.
2. The entity bears the investment
risk
3. Residual definition.
- Defined contribution plan (Ex. SSS)
1. The entity pays fixed
contribution into a separate
entity called fund.
2. There is no specification of the
retirement benefit to be received
by the employee.
3. Contribution is definite but the
benefit is indefinite.
4. Once the entity pays the benefit,
it has no more obligation to fulfill
5. The employee bears the
investment risk.
RA 7641- P/E benefit plan
1. Contributory plan- both the employer
and employee contributes
2. Non-contributory- only the employer
contributes
3. Funded plan- there is a funding
agency responsible to pay the
employees when due.
4. Unfunded plan- not literally no fund at
all but there is no separate fund .
➢ Accounting for Defined Contribution
Plan is straightforward.
➢ No actuarial assumptions are required
to measure obligation or expense
under defined contribution plan
 ➢ No actuarial gain or loss are
recognized under defined contribution
plan
➢ Obligations under defined
contribution plan are measured on an
undiscounted basis, except where
they are not expected to be settled
before 12 months after the end of the
annual reporting period in which the
employees render related services.
ILLUSTRATION
Formaran Co’s annual salary expense for 2020 is as follows:
- Gross salary is P500,000
- Withholding tax, 30%
- Payable to DCP 7%
- Entity’s contribution to the DCP is 10% of the gross salary
Required:
Prepare the journal entry on December 31, 2020

SOLUTION:
12/31/20 Salary Expense 500,000
WT payable (30%x 500k) 150,000
Defined contribution payable (7%) 35,000
Cash 315,000

Salary expense(10% x 500k) 50,000

Defined contribution payable 50,000
To record employers’ share to the DCP

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