LARFAGE is French industrial company specialising in three major products: cement, construction aggregates,

and concrete. Lafarge Zambia operates 2 integrated cement plants (situated in Ndola and Lusaka) with a total

production capacity of 1.4 million tonnes per annum. The 440 direct employees supported by several hundred more

contracted employees. As the key enablers of its strategy and vision, its people are at the heart of everything the

company does. The Lafarge Group aspires to build and sustain a Learning Organisation focused on achieving

sustainable transfer of knowledge, skills, and behaviors. Further the company ensures that its employees social

security protection is done especially after, retirement. In line with this, LARFAGE introduced a defined benefit

pension plan for its employees, on January 1, 2019. This pension is managed by ZSIC Life .ZSIC has provided the

following selected data for the years 2019, 2020, and 2021.

2019 2020 2021

For the year ended December 31

Plan assets at fair valua 100,000 170,000 360,000

Defined benefit obligation 120,000 400,000 648,000

Employers funding contribution 100,000 120,000 210,000

actual return on plan assets 10% 10% 10%

discount (interest) 13% 11% 8%

service cost ( net periodic pension

expense) 120,000 170,000 238,000

Benefits paid - 60,000 37,000

LARFAGE amended the pension plan on January 1, 2020, to grant employees past service benefits with a present

value of K80, 000.At the end of the year 2020 Changes in actuarial assumptions establish the end-of-year defined

benefit obligation at K650, 000.

Required

a) For the 3 years 2019, 2020 and 2021 calculate the amount to be recognised as an expense, asset

and liability relating to the pension fund and Prepare all the necessary journal entries for the years

2019, 2020, and 2021 (14 marks)

b) Calculate the fund status for years 2019, 2020, and 2021 and advice LARFAGE employees on

whether they anticipate to experience difficulties in getting their terminal benefits when they

retire.(6 marks)