424 PART 2 THE STATEMENT OF FINANCIAL POSITION
In Distinguish between past service cost and current service cost for post-employment benefit plans. CI What is the prescribed accounting treatment for defined contribution and defined benefit post-employment plans in AASB 119? D Briefly describe the nature of the net defined benefit liability or asset recognised by an employer for a defined benefit plan in accordance with AASB 119. Describe the components (including how they are calculated) of the superannuation expense (i.e. defined benefit cost) of a reporting entity with a defined benefit superannuation plan for its employees.
Problems
® Spring Ltd is a manufacturer of leather goods. As part of their remuneration package, managers are able to purchase the company’s products at cost and have access to low-interest loans. For the period ended 30 June 2013, the production manager acquired leather goods that cost $1000 to manufacture, and on 1 July 2012 borrowed $100 000 from Spring Ltd at an annual interest rate of 5%. Spring Ltd can borrow from ABC Bank at 8% per annum. Required What general journal entries should be recorded by Spring Ltd to recognise employment benefits received by the production manager? ® After 15 weeks of the reporting period have passed, Jones’ pay increases to $60 000 per annum, or $1153.85 per week. At this time, the recorded balance of ‘annual leave expense’ and ‘annual leave payable’ is $1355.70 ($90.38 per week x 15 weeks). Jones is entitled to four weeks’ annual leave with a loading of 17.5%. Required What general journal entry(ies) should Jones’ employer record to recognise these events? 1E1 The employees of Addison Ltd are entitled to 13 weeks’ long-service leave after 15 years’ continuous service. The following information has been compiled for calculating the liability for long-service leave as at 30 June 2014. Probability of Years of service Number of Aggregate annual Aggregate projected becoming unconditionally as at employees as at salaries for annual salaries when entitled to 30 June 2014 30 June 2014 2013/2014′ leave is due long-service leave
4 22 $550 000 $940 000 0.35 8 28 240 000 340 000 0.90 12 24 170 000 180 000 1.00 16 2* 80 000 80 000 1.00 76 $1 040 000 $1 540 000
As at 30 June 2014, the two employees with 16 years’ service had not taken any long-service leave. ‘ Includes the salaries earned during 2013/2014 by employees who resigned during 2013/2014.
The long-service leave liability reported for the year ended 30 June 2013 was $72 corporate bond rates have been identified.
- The following government and
Period to maturity Government bond rate (%) Corporate bond rate (%) 3 years 3.0 3.5 4 years 3.5 4.0 7 years 4.0 4.5 8 years 5.0 6.0 11 years 7.0 8.0 12 years 8.0 10.0 16 years 9.0 11.0
Copyright C) Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2013 — 9781442561175 – Henderson/Issues in Financial Accounting 15e
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