Drill oil Plc is a medium-sized company that supplies exploration and drilling equipment to companies engaged in the upstream sector of the oil and gas industry in Scotland. It has a staff strength of 600 full-time employees and operates a defined benefit pension plan for all its staff. On 1 January 2022 the fair value of the pension plan assets was 3,000,000 and the present value of the plan liabilities was 3,400,000.

Drill oil Plc has just received a report from the Trustees and the actuary estimates that the current and past service costs for the year ended 31 December 2022 are 500,000 and 100,000 respectively. The actuarys report disclosed that the past service cost is caused by an increased in pension benefits arising out of new rules introduced and takes effect from 31 December 2022. The plan liabilities on 1 January and 31 December 2022 correctly reflect the impact of this increase which has already been accepted by management of Drill oil Plc.

The interest rate on high quality corporate bonds for the year ended 31 December 2022 was 5%.

The pension plan paid 300,000 to retired members on 31 December 2022. On the same date, Drill oil Plc made payments of 900,000 in contributions to the pension plan and this includes 60,000 in respect of past service cost.

Extracts from the accounts department as of 31 December 2022 disclosed the fair value of the pension assets as 4,000,000 and the present value of the plan liabilities as 4,200,000 respectively.

In accordance with IAS 19 Employee benefits, Drill oil Plc recognises remeasurement gains and losses in Other Comprehensive Income in which they occur.

REQUIRED:

1. Calculate the remeasurement gains or losses on pension plan assets and liabilities that will be included in Other Comprehensive Income for the year ended 31 December 2022 in the books of Drill oil Plc.

2. As a Pension Advisor, draft a short memo explaining to management of Drill oil how the net loss or gain is computed and recognised.