A review of the pension transactions for 2020 revealed the following:

1. For 2020, the service cost for HTSM employees is projected by the actuary to be $236,000. The current service cost is credited at the end of each fiscal year. Nothing has been recorded in the financials to reflect this.
2. The actuary has reviewed the new plan and determined that the past service costs for existing employees is $96,000 (a cumulative total over the past 20 years). HTSM has not yet reflected this in its current results and is unclear on how to accurately reflect this in its financial statements. HTSM employees would be eligible for full benefits after a one-year vesting period.
3. HTSM's current borrowing rate and settlement rate is 7%. HTSM's management has specifically ruled out the option of purchasing an insurance contract for the future settlement of its pension liability. The current interest rate on high-quality corporate bonds is 8%.
4. The plan paid only $34,000 in benefits to its retirees for 2020 and HTSM contributed $88,000 to the plan throughout the year.
5. Due to declining economic conditions, the actuary has revised its assumptions for age of retirement and final salary. This has resulted in an actuarial loss of $55,000. HTSM must also account for an actuarial loss of $19,000 resulting from differences in past assumptions and actual costs (experience losses). This has not yet been accounted for in the statements.
6. The actual return on plan assets was $16,500, significantly lower than projected.
7. The defined benefit obligation as determined by the actuarial valuation is the defined benefit obligation used for accounting purposes. The fair value of the plan assets was $980,000 at the end of 2019.

Excerpts from HTSM's financial statements are provided below, prepared under ASPE.

	2019	2020
Total current assets	$ 2,078,900	$ 2,044,900
Fixed assets, at carrying amount	11,700,900	14,010,200
Total current liabilities	822,400	773,000
Long-term debt	345,900	333,800
Net defined benefit liability	2,165,000	?
Operating profit	1,890,000	1,345,000
Other revenue and other expenses
CostsExpansion (manufacturing facility)	58,000	777,000
Interest expense	390,000	482,000
Net income	937,300	55,900

1. HTSM Manufacturing Inc.'s management is reviewing its current pension accounting in preparation for an upcoming meeting with the board of directors and its pension committee. Complete the calculations needed to record the ending net defined benefit liability or asset (DBO, Plan Assets, Pension Expense, Net defined benefit liability, and Items included in OCI).

2. Assume the role of a consultant and discuss the financial reporting issues, particularly the implications for the financial statements and the differences in reporting and presentation if the company moved to IFRS.

3. Provide guidance on which method (IFRS or ASPE) would be preferable for HTSM.