The following information relates to the Retiree's Retreat Superannuation Plan,which is a defined benefit scheme.Amounts given for all assets are at net market value. At balance date the scheme is owed from the current period.
During the period shares in listed companies that had a net realisable value of $5 million at the beginning of the period were sold for $6.2 million.Shares were purchased during the period for $2 million.
Actuarial reports on the fund are undertaken annually at balance date.The actuarial estimate of the accrued benefits were:
What is the total expense for the period ended 30 June 2003 assuming that the plan's trustees have elected to prepare an income statement?

Question

The following information relates to the Retiree's Retreat Superannuation Plan,which is a defined benefit scheme.Amounts given for all assets are at net market value.  At balance date the scheme is owed from the current period.
 During the period shares in listed companies that had a net realisable value of $5 million at the beginning of the period were sold for $6.2 million.Shares were purchased during the period for $2 million.
Actuarial reports on the fund are undertaken annually at balance date.The actuarial estimate of the accrued benefits were:
 What is the total expense for the period ended 30 June 2003 assuming that the plan's trustees have elected to prepare an income statement?

Quizplus · Accepted Answer

Total expense for the period is calculated as the sum of the cost of current service, interest cost on the liability, expected return on plan assets, and any actuarial gains or losses.

Cost of current service = $5,600,000 
Interest cost on liability = $1,200,000 
Expected return on plan assets = $700,000 
Actuarial loss = $864,000

Total expense = $5,600,000 + $1,200,000 - $700,000 + $864,000 = $8,364,000.

Therefore, the correct answer is option C.

The Following Information Relates to the Retiree's Retreat Superannuation Plan,which