The Campolino Company has a defined benefit post-retirement health-care plan for its employees. To fund the plan, Campolino makes an annual cash contribution to a health-care benefit fund on December 31 of each year. At the beginning of Year 5, Campolino amended the plan to provide additional benefits to all employees. Assume that the health-care benefit fund pays benefits to employees on December 31 of each year.
The following facts apply to the plan for the year ended December 31, Year 5:
Present value of defined benefit obligation (PVDBO)
on January 1 ……………………………………………… $650,000
Plan assets at fair value (FVPA) on January 1 420,000
Service cost 46,000
Past service cost 16,000
Actual return on plan assets 28,000
Employer cash contribution to post-retirement benefit fund 50,000
Benefit paid by post-retirement benefit fund 42,000
Discount rate 5 percent
Plan assets at fair value (FVPA) on December 31 456,000
Required:
Use the following template to determine the post-retirement defined benefit cost to be recognized in (a) net income and (b) other comprehensive income for the year ended December 31, Year 5, and the post-retirement defined benefit liability (asset) at December 31, Year 5, to be reported by Campolino Company under IFRS. Prepare a summary journal entry to reflect the recognition of these amounts.