Question

Wiley Corp. provides a defined benefit pension plan for its employees. The trustee administering the plan provided the following information for the year ended December 31, 2020:

         Fair value of plan assets, Jan 1.........................................      $ 1,200,000

         Defined benefit obligation, Jan 1.....................................         1,270,000

         Current service cost.........................................................            300,000

         Employer's contributions ...............................................              360,000

         Past service cost (at Jan 1)...............................................             30,000

         Benefits paid retirees.......................................................            325,000

         Actual return on plan assets ............................................                    5%

         Interest (discount) rate....................................................                     8%

a. What is the pension expense to reported for 2020 using ASPE?

b. What is the pension expense to be reported for 2020 using IFRS?

Answer 1

1.Pension expenses reported for 2020 using ASPE(Accounting Standards for Private Enterprises):

Current service cost = $3,00,000

(+)Interest cost    = $1,01,600 (Defined benefit obligation 12,70,000*8%)

(+)Past service cost = $30,000

(-)Actual return = $60,000 (fair value of plan assets 12,00,000*5%)

PENSION EXPENSE = $3,71,600.

2.Pension expenses reported for 2020 using IFRS(International Financial Reporting Standards)

Current service cost = $3,00,000

(+) Interest cost = $1,01,600 (Defined benefit obligation 12,70,000*8%)

(+)Past service cost = $30,000

(-)Actual return = $60,000 (fair value of plan assets 12,00,000*5%)

(-)Actuarial loss = $70,000

PENSION EXPENSE=$3,01,600