Blogg Ltd. operates a defined benefit pension plan for 45 of its senior employees

. In 2020, the company made contributions equal to the full current service cost of $897,500, as determined by the actuary. The plan assets had a fair value of $25,000,000 at January 1, 2020, and the discount rate is assumed to be 6.2% per annum. The pensionable salaries for 2020 of those in the plan at January 1, 2020, totalled $11,000,000

. Benefits paid to plan members during the year equalled $1,000,000 and were paid on June 30, 2020.

On July 1, 2020, 15 members of Blogg’s defined benefit plan transferred to the defined contribution plan. On the transfer, a payment of $4,200,000 was paid from the defined benefit plan into the defined contribution plan. The reduction in the obligations of the defined benefit plan as a result of the transfer was $3,900,000.

Blogg pays contributions to the pension plan on June 30 each year.

The interest cost for the year to December 31, 2020, was calculated correctly at $945,000.

Required

: a) Calculate the net expense to be charged to profit or loss of Blogg for the year to December 31, 2020, in respect of the defined benefit pension plan (do not calculate amount to be charged through OCI)

. b) Calculate the expected value of the assets in the plan as at December 31, 2020

Answer rating: 100% (QA)

The solution is provided in a statement format Date Particulars PVDBO Comment Plan Asset Comment Net ... View the full answer