Question 1

Which of the following is not a true statement concerning the accounting for superannuation costs by employers under a defined benefits plan?

Accepted Answer

When an employee is paid under the superannuation plan, the payment is not treated as an expense, but as a reduction of the liability for the superannuation plan. The expense related to the superannuation plan is recognized over the employment period of the employees who are covered by the plan. Therefore, option B is not a true statement concerning the accounting for superannuation costs by employers under a defined benefits plan.

Question 2

Discuss the three types of share-based payment transactions as outlined by AASB 2 'Share-based Payment'.

Accepted Answer

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Question 3

There are two types of risk associated with post-employment benefits,investment risk and actuarial risk.Explain these terms and describe the situations when these risks are borne by the employee and when they are borne by the employer (in accordance with AASB 119).

Accepted Answer

The answer of There are two types of risk associated...

Question 4

What are the two approaches to accounting for post-employment benefit costs by employers?

Accepted Answer

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Question 5

The method of accounting for superannuation costs based on the assumption that the trust that manages the superannuation plan is a separate legal entity to the employer and is responsible for the fund's obligations is:

Accepted Answer

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Question 6

Which of the following methods for the recognition of actuarial gains and losses are acceptable under AASB 119?
I.Immediate recognition of all actuarial gains or losses through profit or loss
ii) Recognition of all actuarialgains or losses outside profitor loss
iii) The corridorapproach

Accepted Answer

Under AASB 119, all three methods for the recognition of actuarial gains and losses are acceptable: immediate recognition through profit or loss, recognition outside profit or loss, and the corridor approach.

Question 7

In terms of post-employment benefits,at what point does past-service costs arise?

Accepted Answer

Past-service costs arise when a defined benefits post-employment plan is established or when the plan's benefits are increased. These costs arise from benefits earned by employees in previous years that will be paid out in the future. The employer must account for these costs and ensure there are sufficient funds to pay for them. The other options given do not relate directly to past-service costs.

Question 8

Which of the following is not considered a post-employment benefit by AASB 119?

Accepted Answer

Termination benefits are not considered post-employment benefits according to AASB 119. Post-employment benefits typically include pensions, life insurance, and medical care provided after employment ends, whereas termination benefits are provided as a result of either an entity’s decision to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept voluntary redundancy in exchange for those benefits.

Question 9

Leopard Ltd has a defined benefit superannuation plan where the present value of the accrued benefits on 1 January 20X6 was $850 000 and on 31 December 20X6 was $910 000.During 20X6 Leopard Ltd paid $80 000 to the plan.On 1 January 20X6 the net market value of the plans assets was $365 000 and on 31 December 20X6 was $468 000.Under the net-worth method the superannuation expense for the year ended 31 December 20X6 to be shown in Leopard's accounts is:

Accepted Answer

Under the net-worth method, the superannuation expense is calculated as the increase in the present value of the accrued benefits during the year, adjusted for any contributions made to the plan.

Increase in present value of accrued benefits = $910,000 - $850,000 = $60,000

Contributions made to the plan = $80,000

Therefore, superannuation expense = $60,000 - $80,000 = -$20,000

Since the expense cannot be negative, it should be recognized as a reduction in the carrying amount of the plan assets, resulting in a net liability.

Net liability = ($468,000 - $365,000) - $20,000 = $83,000

Hence, the superannuation expense for the year ended 31 December 20X6 to be shown in Leopard's accounts is $37,000 ($80,000 - $83,000).

Quiz 12: Accounting for Employee Benefits