Mackay Ltd provides defined superannuation benefits to two (2) of its employees which represents an entitlement of three times their final salary on retirement. The following details are relevant to the current superannuation obligation of the company for the two employees for the years ended 30 June 2011 and 2012:

In accordance with AASB 119 "Employee Benefits", what is the interest cost and actuarial gain (loss) for the defined benefit obligation for the year ending 2012?

Question

Mackay Ltd provides defined superannuation benefits to two (2) of its employees which represents an entitlement of three times their final salary on retirement. The following details are relevant to the current superannuation obligation of the company for the two employees for the years ended 30 June 2011 and 2012:

In accordance with AASB 119 "Employee Benefits", what is the interest cost and actuarial gain (loss) for the defined benefit obligation for the year ending 2012?

Quizplus · Accepted Answer

The interest cost and actuarial gain (loss) for the defined benefit obligation can be calculated using the following formula:

Interest cost = Opening defined benefit obligation x Discount rate

Actuarial gain (loss) = Closing defined benefit obligation - (Opening defined benefit obligation + Service cost + Interest cost)

For the year ending 2012:

Interest cost = $247,000 x 0.06 = $14,820

Actuarial gain (loss) = $417,000 - ($340,000 + $55,000 + $14,820) = $6,180 loss

Therefore, the correct answer is D) $18,550; ($4,840).

Mackay Ltd Provides Defined Superannuation Benefits to Two (2) of Its