As at 1 May 2015 the present value of the obligation arising from Glasgow plc's defined benefit
Question:
As at 1 May 2015 the present value of the obligation arising from Glasgow plc's defined benefit pension plan was £2,600m. At that date the fair value of the plan's assets was £2,400m. The discount rate at the start of the year was 8%. The plan's actuaries predicted a return on the plan's assets of 12%.
The following figures were recorded during the year ended 30 April 2016:
...........................................£m
Current service cost ......290
Benefits paid ...................260
Contributions received ...280
On 30 April 2016 the present value of the plan's obligation was £2,800m and the fair value of the plan's assets was £2,600m.
Required:
a. Calculate the figures that will appear with respect to pensions in Glasgow plc's financial statements for the year ended 30 April 2016.
b. Discuss the suggestion that the estimate for the value of the plan's obligations is too uncertain to be reflected in the financial statements. (15%)
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik