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  • Class Exercise - Defined Benfit Scheme With Asset Ceiling

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    Bennie King
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    Logic Limited has a defined benefit pension plan. As of December 31, 2017 the plan had assets of $1,905,000 but obligations of $1,200,000, resulting in a surplus of $705,000. However, there is a potential future reduction in plan assets of $300,000 which limits the recognized surplus to $405,000.

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    Logic Limited has a defined benefit pension plan. As of December 31, 2017 the plan had assets of $1,905,000 but obligations of $1,200,000, resulting in a surplus of $705,000. However, there is a potential future reduction in plan assets of $300,000 which limits the recognized surplus to $405,000.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    7 views1 page

    Class Exercise - Defined Benfit Scheme With Asset Ceiling

    Uploaded by

    Bennie King
    Logic Limited has a defined benefit pension plan. As of December 31, 2017 the plan had assets of $1,905,000 but obligations of $1,200,000, resulting in a surplus of $705,000. However, there is a potential future reduction in plan assets of $300,000 which limits the recognized surplus to $405,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    CLASS EXERCISE: DEFINED BENEFIT PLAN WITH ASSET CEILING

    Logic Limited has a defined benefit plan. The following related balances were extracted from
    the trial balance as at 1 January 2017

    Defined benefit plan asset N$ 1050 000

    Defined benefit obligation N$ 600 000

    Defined benefit plan asset ceiling N$ 0

    Other information relating to the plan for the year ended 31 December 2017 is as follows:

     The marker yield on high quality corporate bonds remained unchanged at 10%
    throughout both 2016 and 2017.
     Benefits paid to employees N$ 150 000
     The total of N$ 600 000 was paid into the plan asset (37.5% was contributed by
    employees and 62.5% by Logic Limited
     The present value of current service costs was estimated to be N$ 750 000
     The company actuary provided you with the following measurements at 31
    December 2017
    - Plan obligation: Present value N$ 1 200 000
    - Plan asset fair value N$ 1905 000
    - Future refunds and reductions in contributions: Present value : N$ 300 000

    Required:

    Provide all journals relating to the defined benefit plan for the year ended 31 December
    2017.

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