Pasha plc is a company that is listed on the Lusaka Securities Exchange. The company prepares accounts to 31 December each year. Pasha plc runs the following two pension plans of for its employees:

Sungapo Plan

This is a new plan which was introduced on 1 October 2019. Membership to the scheme is voluntary and is open to all employees. The first group of employees were admitted to the scheme on 1 October 2019 and thereafter new members are only admitted to the scheme on 1 January of each year.

Employees and the employer are required to contribute 15% of the employees monthly emoluments each. Employees contributions are effected through the payroll. Pasha plcs obligation is limited to its monthly contributions. Employees will only get their benefits upon reaching 65 years, or on leaving the company, or after working for the company for a continuous period of 20 years, whichever is the earliest.

Employees total benefits will be computed as the sum of the employees contributions, employers contributions and a return on the total contributions. The scheme is managed by an independent company known as Pemba Pensions Ltd. Pemba Pensions Ltd agreed to charge Pasha plc 45% of the of return on total contributions.

During the year to 31 December 2019, Pasha Plc paid emoluments of K2.7 million to its employees. At 1 October 2019, 30% of the companys employees joined the plan and on 1 January 2020, this percentage increased to 65%. Pasha Plc paid its total contributions for the period to 31 December 2019 on 10 January 2020.

Tasha Plan

This is an old plan which was introduced fifteen year ago. Under this plan the pension is paid as a lump sum at the time of retirement in addition to monthly payments over the pensioners remaining life of up to a maximum of 50 years. The present value of accrued employee pension benefits not yet settled at 1 January 2019 amounted to K300 million and the fair value of plan assets at the same date was K330 million. Pasha Plc was still owing contributions to the fund amounting to K12 million in respect of past periods as at 1 January 2019.

During the year to 31 December 2019, the following transactions took place:

1. Total contributions paid to the pension fund amounted to K60 million including the K12 million arrears above. The amount paid also includes employee contributions amounting to K18 million. Pasha plc made total pension payments to pensioners amounting to K108 million.
2. The present value of pension benefits accruing during the year to 31 December 2019 arising from employees services rendered in that year amounted to K120 million.
3. The benefit formula was amended during the year for the benefit of its employees. As a result of the improved benefit formula, additional benefits accrued at 1 January 2019 amounting to K60 million. This figure relates to employees remaining in the plan membership after the redundancies referred to in note (4) below.
4. During year ended 31 December 2019, Pasha undertook a restructuring plan in which a number of employees who were previously members of the plan were rendered redundant. Accrued pension benefits amounting to K60 million relating to those rendered redundant were forfeited. Instead, Pasha Plc made redundancy and compensation for loss of office payments to these employees amounting to K180 million.
5. The present value of accrued employee pension benefits not yet settled at 31 December 2019 amounted to K450 million and the fair value of plan assets at the same date was K408 million. Pasha plc was still owing contributions to the fund amounting to K3 million in respect of past periods as at 31 December 2019.

Other information

Yields on high class corporate bonds were 10 % at 1 January 2019 and 15% at 31 December 2019 for each of the above plans.

Required:

Show how each of the above plans will be accounted for in the financial statements of Pasha plc for the year ended 31 December 2019, in accordance with IAS 19 Employee Benefits. (20 marks)