Question
(a)Hope Sdn Bhd contracted to pay its employees on termination of service a lump-sum benefit equal to 4% of final annual salary for each year
(a)Hope Sdn Bhd contracted to pay its employees on termination of service a lump-sum benefit equal to 4% of final annual salary for each year of service. The annual salary of Mr. Yong at the beginning of year 1 is RM100,000 and is assumed to increase at 5% (compound) each year.
Assume Mr. Yong will leave Hope Sdn Bhd at the end of year 5, there are no changes in actuarial assumptions, and the appropriate discount rate is 8% per annum.
Required:
Determine the present value of Hope Sdn Bhd's obligation to Mr. Yong's post- employment benefit at the end of the year for each of the 5 years and the current services cost and interest cost for each of the 5 years.
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