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Part II – Problems: Write your final answers on each space provided.

Any form of erasures
will render your answers invalid. Answers with no solutions or wrong solutions will not be

1. A profit sharing bonus plan requires an entity to pay 10% of its income for the year to
employees who serve throughout the current year and who will continue to serve
throughout the following year. The entity reported income of P90, 000, 000 for 2013.
The entity expects to save 10% of the maximum possible bonus payment through
staff turnover. The bonus will be paid on December 31, 2014. How much is the
amount paid to the employees in 2014 assuming the estimating savings is correct?

2. On January 1, 2015, an entity announced its decision to close its factory located in
Maguindanao and terminate all 200 employees as a result of economic downturn. The
entity shall pay P20, 000 per employee upon termination. However, to ensure that
the windup of the factory occurs smoothly and all remaining customer orders are
completed, the entity needs to retain at least 20% of employees until closure of the
factory in eight months. As a result, the entity announced that all employees who
agree to stay until the closing of the factory shall receive P60, 000 payment at the
end of eight months in addition to receiving their current wage throughout the period
of closure instead of the P20, 000. Based on the offer, the entity expects to retain 50
employees until the factory is closed. Out of the total benefits under termination
plan, how much is attributable to termination benefit and short-term benefit
respectively? __________________

3. On September 1, 2012, Howe Company offered special termination benefits to
employees who had reached the early retirement stage specified in the entity’s
pension plan. The termination benefits consisted of lump sum and periodic future

Additionally, the employees accepting the entity offer receive the usual early
retirement pension benefits. The offer expired on November 30, 2012. Actual or
reasonably estimated amounts on December 31, 2012 relating to the employees
accepting the offer are as follows:
Lump sum payments made on January 1, 2013 475,000
PV of periodic payments of P60,000 annually for 3 years 155,000
(which will begin January 1, 2014)
Reduction of accrued pension cost on December 31, 2012 for the 45,000

2012 are reasonably estimated as follows: Vacation pay 1. what amount should West Company report as liability for compensated absences? __________________ 5. West Company determined that it has an obligation relating to employees’ rights to receive compensation for future absences attributed to employees’ services already rendered. and payment of the compensation is probable. terminating employees 3.000 Current service cost 40. What amount should be reported as loss on termination benefits in 2012? __________________ 4.000 In the December 31.00 0 Actuarial loss 4. The obligation relates to rights that vest. beginning 300.2.000 Remeasurement gain on plan assets 4.000 Benefits paid to employees 50.000 Settlement price of obligation settled (PV of the PBO was 90.00 0 Projected benefit obligation. F Company holds the following records for the current year: Fair value of plan assets. The entity’s obligations on December 31.1.000 Sick pay 800. what amount should be reported as total liability for termination benefits? __________________ 3.00 0 Past service cost 20. statement of financial position.200.000 Contribution to the plan 50.000) 800. What is the journal entry to record the employee benefit expense? __________________ . beginning 500. On December 31. 2012. 2012.1.000 Discount rate 12% 5.

000 Benefits paid 400. what is the amount to be credited to other comprehensive income? __________________ 8. 2017: Fair value of plan assets 8.000 Expected rate of return 10% Past service cost 100. E Company provides an incentive compensation plan under which its president receives a bonus equal to 15% of E’s profit before deducting the bonus and tax.000 PV of PBO settled 500.000 Settlement loss on obligation settled 100.000. G Company had the following information on December 31. how much was the beginning prepaid/accrued benefit cost? __________________ 9. H Company had the following information for the year 2017: Projected benefit obligation.000. 2016: .000 Increase in PBO due to change in actuarial assumption 50.456.545.000 Settlement loss on obligation settled 25.000 Settlement price of obligation settled 175. How much is the bonus? __________________ 7. 1/1/17 1.000 If net interest expense is P75. If there is an asset ceiling.000 and asset ceiling. ending of P550.000 Assuming there is no change in actuarial assumptions. I Company provided the following information on December 31. 5. Income tax rate is 30%.2.000.000 Benefits paid 250.500.000 Current service cost 200.000.000 Contribution to the fund 1. E’s profit after tax and after bonus for the year is P2.000 Discount rate 10% Return on plan assets 500. what would be the amount of prepaid/accrued benefit cost to be reported in the statement of financial position? __________________ 6. beginning of P200.

000 Settlement price of obligation settled 400. Current service cost 520.000 Past service cost during the year 360. What portion (total amount) of these items will be added to the projected benefit obligation? __________________ 9. What is the actuarial gain or loss (if any)? __________________ 10. What is the rate used to compute for interest? __________________ 10.000 Current service cost 700. 12/31/16 4. J Company had the following information relating to employee benefits for the year 2016: Benefits paid to employees 500. What is the ending balance of projected benefit obligation? __________________ "Things work out best for those who make the best of how things work out. The projected benefit obligation had a net increase of P300.000 Interest expense on PBO 590.2.000 Contribution to pension fund 950.1.000 Interest income on plan assets 150.000 Fair value of plan assets.2.000 Actual return on plan assets 810.1.000 Contribution to the plan 100. What is journal entry to record the related employee benefit expense? __________________ 10.John Wooden .000 for the year." .000 and a credit to prepaid/accrued benefit cost at P700.3.000 The final entry related to this included a debit to employee benefit expense at P700.000.000 Loss on plan settlement 240.000 Interest income (5/6 of interest expense) 450. 10.000 9.600.