[Madhu Chandarasekaran, CFAKeymaster]

This is a Question I received directly:

 

Calculate the effect of the DB plan on Workflow’s financial statements for
the year ended 31 December 2X18 based on the following:
■ Service cost o

This is a Question I received directly:

 

Calculate the effect of the DB plan on Workflow’s financial statements for
the year ended 31 December 2X18 based on the following:
■ Service cost of JPY 9 million
■ Benefits paid of JPY 5 million
■ Yield on long-term investment grade corporate bonds of 2%
■ Benefit obligation at the beginning of the year of 97
■ Fair value of plan assets at the beginning of the year of 1,010
■ Actual return on plan assets of 5%
■ No plan contributions
■ No plan amendments or changes in actuarial assumptions

 

What is the Net Pension Assets ?

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[Madhu Chandarasekaran, CFAKeymaster]

Dear Santosh:

to answer this Question:

 

Beginning Net Pension assets is 913M (1010 – 97)

– Subtract Service cost of ( 9M )

Return on Plan Assets = (5% * 1010M ) = +50.5
Interest

Dear Santosh:

to answer this Question:

 

Beginning Net Pension assets is 913M (1010 – 97)

– Subtract Service cost of ( 9M )

Return on Plan Assets = (5% * 1010M ) = +50.5
Interest on Plan Benefit Obligation = 2% * 97 = -1.94

 

Ending Net Pension Asset = 913 +50.5 -9 – 1.94 = 952.6M

 

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