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9. An entity operates a defined benefit pension plan and changes it on January 1, 20X4, to a defined contribution plan. The defined benefit pension plan still relates to
past service but not to future service. The net pension liability after the plan amendment is $70 million, and the net pension liability before the amendment was $100
million. How should the entity account for this change?
a. The entity recognizes a gain of $30 million.
b. The entity does not recognize a gain.
c. The entity recognizes a gain of $30 million over the remaining service lives of the employees.
d. The entity recognizes the gain but applies the 10% corridor approach to it.
10. An entity on December 31, 20X5, changes its defined benefit pension plan to a defined contribution plan. The entity agrees with the employees to pay them $9
million in total on the introduction of a defined contribution plan. The employees forfeit any pension entitlement for the defined benefit plan. The pension liability
recognized in the statement of financial position at December 31, 20X4, was $10 million. How should this curtailment be accounted for in the statement of financial
position at December 31, 20X5?
a. A settlement gain of $1 million should be shown.
b. The pension liability should be credited to reserves and a cash payment of $9 million should be shown in expense in the statement of comprehensive income.
c. The cash payment should go to reserves and the pension liability should be shown as a credit to the statement of comprehensive income.
d. A credit to reserves should be made of $1 million.
11. The salaried employees are entitled to 30 days paid leave each year. The entitlement accrues evenly over the year and unused leave may be carried forward for one
year. The holiday year is the same as the financial year. At September 30, 20X9, the entity has 100 salaried employees and the average unused holiday entitlement is
two days per employee. 4% of employees leave without taking their entitlement and there is no cash payment when an employee leaves in respect of holiday
entitlement. There are 240 working days in the year and the total annual salary cost is $2 million. What would be the accrual in the financial statements for holiday pay
entitlement?
a. $2 million
b. $1.92
c. $160,000
d. $16,000
12. An entity has the following balances relating to its defined benefit plan:
• Present value of the obligation: $13 million
• Fair value of plan assets: $17 million
• Actuarial losses: $1.3 million unrecognized
• Past service cost: $1.2 million unrecognized
• Present value of available future refunds and reduction in future contributions: $0.1 million
Calculate the value that will be given to the net plan asset under IAS 19.
a. $6.5 million
b. $3.9 million
c. $4 million
d. $2.6 million
13. An entity has a defined benefit pension plan. As of January 1, 20X9, these values relate to the pension scheme:
• Fair value of plan assets: $2.5 million
• Present value of defined benefit obligation: $2 million
• Cumulative unrecognized actuarial gains: $1 million
• Average remaining working lives of employees: 20 years
At the end of the period at December 31, 20X9, the fair value of the plan assets has risen by $0.5 million. The present value of the defined benefit obligation has risen
by $0.3 million. The actuarial gain is $1.2 million, and the average remaining working lives of the employees is 20 years. The entity wishes to use the full recognition
approach for actuarial gains and losses. Show how the actuarial gain or loss for the period ending December 31, 20X9, could be recognized in the financial statements.
a. $1.2 million
b. $0.75 million
c. $0.5 million
d. $37,500
14. What would be the correct answer if the corridor approach was used?
a. $1.2 million
b. $0.75 million
c. $0.5 million
d. $37,500