Jamieson Corp.sponsors a defined benefit plan for its employee group. The following data pertains to the plan's first 2 years in existence: Jamieson's balance sheet as per IFRS for Year 2 would show a net:
A) defined pension asset of $26,576.
B) defined pension liability of $26,576.
C) defined pension asset of $48,876.
D) defined pension liability of $48,876.

Question

Jamieson Corp.sponsors a defined benefit plan for its employee group. The following data pertains to the plan's first 2 years in existence:  Jamieson's balance sheet as per IFRS for Year 2 would show a net:
A) defined pension asset of $26,576. 
B) defined pension liability of $26,576. 
C) defined pension asset of $48,876. 
D) defined pension liability of $48,876.

Quizplus · Accepted Answer

The defined benefit plan has a fair value of plan assets of $400,000 at the end of Year 2, which is less than the projected benefit obligation (PBO) of $426,576. As a result, the balance sheet would show a defined pension liability of $26,576.