Professional Documents
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POST-EMPLOYMENT
EMPLOYEE
BENEFITS
Based on lectures by Tom Siy, CPA and Christian Aris Valix, CPA
(CPAR)
DEFINITIONS
ACCOUNTING FOR
DEFINED BENEFIT PLAN
The liability for defined benefit plans are determined through the
projected unit credit method/accrued benefit method. The
standard recognized that it makes use of actuaries, but does not
require entities to do so
The liability projected benefit obligation (PBO) is recorded only
in memorandum records, and thus doesnt appear in the financial
records. It has a counterpart account fair value of plan assets
(FVPA) which also does not appear in the records
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FVPA, beginning
ADD: Contributions made during the year
ADD: Interest income/expected return on plan assets
ADD/DEDUCT: Remeasurement gains (deduct) or losses (add)
on plan assets
DEDUCT: Benefits paid
DEDUCT: Settlement price
Fair value of plan assets (FVPA), ending
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Unlike PBO and FVPA, this account appears as a line item in the
statement of comprehensive income, computed as follows:
Current service cost
ADD: Past service cost
ADD/DEDUCT: Settlement gains (deduct) or losses (add)
ADD: Interest expense on PBO, beginning
DEDUCT: Interest income on FVPA, beginning
ADD: Interest expense on the effect of asset ceiling, beginning
Employee benefit expense
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REMEASUREMENT GAINS/LOSSES
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Contributions made
DEDUCT: Benefits paid
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