p19-5

You are the controller of a newly established technology firm that is offering a new pension plan to its employees. The plan was established on January 1 2017 with an inits contribution by the employer equal to the actuarial estimate of the past service cost for the existing group of employees. These employees are expected to continue to work for the firm for 20 years on average prior to retirement. The company is considering going public in the next 5 years and the president has asked you to keep eh aware of the accounting changes in moving from ASPE to IFRS. She wants to be sure that the company always chooses the accounting policies that are the closest to IFRS so that changes in the future when the company goes public will be minimized. In addition, sh mis interested in demonstrating a history of profits so that the company can be taken public successfully. The following information is available for you to work with:

Required:

A) without using a pension work sheet determine the surplus or deficit position of the pension plan and the amount reported on the statement of financial position at each end of year, the pension expense for each of the 3 years and any remeasurements gain or loss recorded in OCI for each of the 3 years.

B)without using a pension work sheet determine the surplus or deficit position of the pension plan and the amount reported on the balance sheet at each year end, the pension expense for each of the 3 years. State any assumption made.

C) Prepare a short report to the company president concerning the accounting for the new pension plan. Make a reccomendation to you employer about the approach that should be taken.

2017 2018 2019 Fair value of plan assets, beginning of year* DBO for funding purposes, beginning of year* DBO for accounting purposes, beginning of year* Current service cost for year Discount rate Past service costs granted, January1 Actual earnings on plan assets Employer contributions for the year Benefits paid to retirees by trustee After the initial $75,000 contribution. $75,000 70,000 75,000 12,000 8% 75,000 6,500 12,000 $13,000 8% $14,500 8% 10,000 15,000 4,000 8,000 16,000 5,000