Question No: 01 (A)

Al Salamia Company has a well-established and well-articulated pension plan covering 240 employees under pension plan of zero contribution. Al Salamia has granted DK 960,000 of prior service cost to its employees. Employees are grouped into four segments as per the expected year of retirement:

Group	No. of Employees	%	Expected Date of Retirement
A	60	25	2020
B	40	17	2021
C	50	21	2022
D	90	37	2023
	240

Required:

As a pension analyst, you have been requested to amortize the prior service cost throughout the pension plan horizon (2020 2023).

Question No: 01 (B)

The Jordan Pension Fund has 1,000,000 participants with an average monthly payment for 55% of the participants. The monthly payment per head is JD 400. The contribution of employees is around JD 60 per month. The accumulated fund of the Jordan Pension Fund (JPF) is around JD 140,000,000. 40% of the fund has been deployed into land and buildings with ROI of 15%, 30% of the fund is circulating in the Amman Financial Market with RRR of 12% and the remainder is kept as liquid resources.

Required:

a. Figure out the annual obligation of the fund.

b. Figure out the contribution of employees per year and make accounting treatment.

c. Give opinions on assets, liabilities and expected revenue of the fund on annual basis.

Question No: 02

Abu Dhabi Building Company (ADBC) agreed to construct a building complex in Al Ain at a price of AED 16,500,000. The time horizon for the contract is projected to be 4 years (2020-2023). The information relating to the costs and billings for the signed contract is shown in the table below:

	2020	2021	2022	2023
Cost incurred to date	4,000,000	7,000,000	9,500,000	13,500,000
Estimated cost to be incurred	9,200,000	6,200,000	3,700,000	0
Billings to date	2,500,000	5,000,000	7,000,000	16,500,000
Collection billing to date	2,500,000	4,000,000	5,000,000	12,000,000

Required:

a. Assuming that the ADBC will use the percentage-of-completion method, prepare a schedule to compute the amount of the gross profit to be recognized in 2020, 2021, 2022 and 2023.

b. What would be the case if the ADBC will use the completed method.

c. Show the implication of the contract under the percentage-of-completion method on the balance sheet components and the cashflow statement.

d. Journalize the relevant transactions.