Post Employment Benefits Essay Example | Topics and Well Written Essays - 1750 words

Post Employment returnss - Essay Example2. We affirm been provided with what would be amortized this year (2007) towards Unrecognized Prior wait on Costs, but we have not been provided with what is the actual amount pending towards UPSC.3. We have been told that the employers contribution would be 3% of payroll. But we do not know as to what are the companys expenses on salaries and wages.4. We have no information regarding the number of employees involved in the scheme, their retirement dates, etc. All this information can influence the answer.So, where ever required, we have made fit assumptions relating the above missing information.Answer 1From the given information, if the company decides to go on with its existing (DBP) post employment pull ins plan, from the information available, we can draw up an approximate pension worksheet, as followsItemsGeneral Journal EntriesMemo RecordAnnual Pension ExpenseCash(Prepaid) / Accrued CostProjected Benefit ObligationPlan AssetsUnrecog nized Prior Service CostBalance, Dec. 31, 2006810,000 Cr340,000Dr(a)Unrecognized Prior Service CostBalance, Jan. 1, 2007---(810,000+) Cr340,000 Dr(b)Service Cost88,000 Dr88,000Cr(c) worry Cost81,000 Dr81,000 Cr(d)Actual Return34,000 Cr34,000 Dr(e)Amortization of UPSC21,000 Dr21,000 Cr(f)ContributionsX CrX DrJournal Entry for 2007156,000 DrX Cr(156,000 - X) CrBalance, Dec. 31, 20070(374,000 + X) DrNote In the above table,1. Interest / Discount / Settlement Rate = 10%2. Opening and closing balance of Unrecognized Prior Service Cost is unknown. (Shown as )3. Since the amount contributed by the employer...They do so by letting the company switch over from its existing defined benefits plan to a defined contribution plan to lay aside costs.3. The employees give up their claim on every other obligation, like whatever is pending towards Unrecognized Prior service costs, what ever would be this old age service cost, interest burden on what ever is pending towards Projected Benefits Oblig ation, etc.5. Employer will contribute 3% of the payroll towards the retirement fund or the plan assets hence forth heedless of whatever has been accumulated in the fund, whether it is sufficient, insufficient or in excess.6. AND hence forth, since the company moves on with a defined contribution plan, employer doesnt have any more liability other than payment of his annual contribution towards the fund and what ever post employment benefits are to be derived would be out of the balance in the fund unplowed aside for that purpose.From the given information, if the company decides to go on with its existing (DBP) post employment benefits plan, from the information available, we can draw up an approximate pension worksheet, as followsWhile, if the employer decides to switch over to a defined contribution plan where the employer pays 3% of payroll as his contribution, the agreement being that the employees get to keep what is already in the defined benefit