Question: A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each year of service.

A lump sum benefit is payable on termination of service and equal

A lump sum benefit is payable on termination of service and equal to 1 per cent of final salary for each year of service. The salary in year 1 is P10,000 and is assumed to increase at 7 per cent (compound) each year. The discount rate used is 10 per cent per year. The entity does not fund its obligation to pay lump-sum benefits. The employee is expected to leave at the end of year 5. The defined benefit liability (deficit) at the end of the second year is O P262 O P187 O P196 O P275

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