- 5 Marks
CR – Nov 2024 – L3 – Q2c – Accounting for Defined Benefit Pension Plans
Compute the pension amounts for Oboisah PLC under IAS 19.
Question
Oboisah PLC (Oboisah) operates a defined benefit pension plan for employees who commenced employment with the company prior to 1 April 2021. The pension scheme is non-contributory.
At 31 March 2023, the Group recorded a net defined liability of GH¢157 million. The following information relates to the year ended 31 March 2024:
| Description | Amount (GH¢ million) |
|---|---|
| Employer contributions paid on 31 March 2024 | 43 |
| Benefits paid | 16 |
| Current service cost | 42 |
| Curtailment gain | 3 |
| Present value of defined benefit obligation at 31 March 2024 | 498 |
| Value of plan assets at 31 March 2024 | 315 |
The average yield on relevant corporate bonds was 20% on 1 April 2023. Entries so far made in respect of the employer contributions have been incorrectly debited to accounts receivable and credited to cash. Benefits paid have been correctly recorded.
Required:
In line with IAS 19: Employee Benefits, determine how much pension amounts should be included in the financial statements of Oboisah PLC for the year ended 31 March 2024. Show the appropriate extracts for the above and any correction entries, if necessary.
Find Related Questions by Tags, levels, etc.
- Tags: Defined Benefit Plan, Employee Benefits, Financial Reporting, IAS 19, Pension Obligation
- Level: Level 3
- Topic: IAS 19: Employee Benefits
- Series: Nov 2024