Hello Limited belongs to the manufacturing industry. The company received an actuarial valuation for the first time for its pension scheme which…

CA Intermediate · Advanced Accounting · RTP · May 2024
Hello Limited belongs to the manufacturing industry. The company received an actuarial valuation for the first time for its pension scheme which revealed a surplus of 12 lakhs. It wants to spread the same over the next 2 years by reducing the annual contribution to 4 lakhs instead of 10 lakhs. The average remaining life of the employees is estimated to be 6 years. You are required to advise the company on the following items from the viewpoint of finalization of accounts, taking note of the mandatory accounting standards.

Suggested Answer and Working Notes:

According to AS 15 (Revised 2005) ‘Employee Benefits', actuarial gains and losses should be recognized immediately in the statement of profit and loss as income or expense. Therefore, a surplus amount of 12lakhs is required to be credited to the profit and loss statement of the current year.

Topics: AS 15

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic