Exercise 9.19 – Accounting for defined benefit superannuation plans Some years ago, Wattle Ltd established a defined benefit superannuation plan for…

Fair value of plan assets at 31 December 2016

20 130 000

Additional information

(a)  All contributions received by the funds were paid by Wattle Ltd. Employees make no contributions.

(b)  The interest rate used to measure the present value of the defined benefit obligation was 10% at 31 December 2015 and 31 December 2016.

(c)  The asset ceiling was nil at 31 December 2015 and 31 December 2016.

Required:

1.   Determine the surplus or deficit of Wattle Ltd’s defined benefit plan at 31 December 2016.

2.   Determine the net defined benefit asset or liability that should be recognised by Wattle Ltd at 31 December 2016.

3.   Calculate the net interest and the return on plan assets for the year ended 31 December 2016.

4.   Present a reconciliation of the opening balance to the closing balance of the net defined benefit liability (asset), showing separate reconciliations for plan assets and the present value of the defined benefit obligation.

5.   summary journal entry to account for the defined benefit superannuation plan in the books of Wattle Ltd for the year ended 31 December 2016.