You assist the controller of a newly established technology firm offering a pension plan to its employees. The company is considering going public in the next three years, and the president wants to be sure the company chooses accounting policies closest to IFRS so that changes in the future when the company goes public will be minimized.

The controller, Mr. Teslax provides you with the following information. You are required to assist him with the pension worksheet for the calendar year 2020.

• The balance on January 1, 2020 of the Net Defined Benefit Liability/Asset account amounted to $240 Debit, which represents 20% the plan asset fair value at the beginning of 2020.
• Mr. Teslax acknowledges that the company has incurred current service costs for 2020 but was unable to recall the amount. Also, he was sure that on January 1, 2020, the company amended its pension plan, which resulted in a reduction in prior service benefits for current employees. The present value of the reduced benefits (past service cost) were incurred at the beginning of 2020 but Mr. Teslax was unable to provide you with an amount.
• A discount rate of 2% was used by the company. Based on this rate and the policy of using the opening balance for the year as the base amount, the annual interest cost was 19.4.
• While the company determined the expected returns on invested assets to be $24, the plan asset has done well and received a higher return amounting to $38 for 2020.
• The total pension expense was $98; the benefits paid to retired employees amounted to $112 and the fund received $152 as contributions from the company.
• Mr. Teslax was very sure the fund obligation balance at the end of the year was correctly computed at $970 however the actuaries, upon reviewing the balance, suggested this balance was overstated by $90.4.

Question

1. The plan asset fair value at January 1, 2020 equals:
   1. 960
   2. 1,200
   3. 300
   4. None of the above
2. The past service cost that should appear in the pension worksheet equals:
   1. 20
   2. 30
   3. 10
   4. 40
3. What amount of plan asset remeasurement (loss or gain) should appear in the pension worksheet?
   1. 14
   2. -14
   3. 28
   4. None of the above
4. Determine the current service cost that should appear in the pension worksheet.
   1. 106.6
   2. 192.6
   3. 292.6
   4. 92.6
5. What is the ending balance of the defined benefit obligation?
   1. 970
   2. 879.6
   3. 1,278
   4. None of the above
6. What would be the total pension expense during the year had the company decided to use ASPE instead?
   1. 98
   2. 198
   3. -6.4
   4. -16.4

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