Happy woolly inc provides the following information about...

Happy Woolly Inc. provides the following information about its post-retirement benefit plan for the year 2019. (In Euros) Service cost: 90,000 Contribution to the plan: 56,000 Actual return on plan assets: 62,000 Benefits paid: 40,000 Plan assets at January 1, 2019: 710,000 Defined post-retirement benefit obligation at January 1, 2019: 760,000 Accumulated OCI (Loss) at January 1, 2019: 100,000 (Dr-Loss) Discount (interest) rate: 9% Required: a. Compute the post-retirement benefit expense for 2019 and give your explanation! b. Based on PSAK 24 regarding employee benefits, how is severance pay defined, measured, and disclosed? Please explain your answer!

Transcript

00:02 To compute post retirement benefit expense for 2019 first is to compute the post retirement benefit the post retirement benefit expense for 2019 for this we need to consider various components and adjustments formula to calculate the post retirement benefit expenses as follows so post retirement post retirement benefit expense equals to service cost plus interest cost plus minus expected return on planned assets plus minus amortization amortization of past service cost of past service cost plus minus minus amortization of actual gains or losses so given the provided information let's calculate each component so the service cost given is 90 ,000 euros service cost given is 90 ,000 euros interest cost defined post retirement benefit obligation at january 1, 2019 into discount interest rate so interest cost is 77 ,60 ,000 euros euros into 9 percent into 9 percent which is equal to 68 ,400 euros so expected return on plan assets actual return on plan assets which is equal to 60 ,000 euros which is given expected return on plan assets or actual return on plan assets which is equal to 62 ,000 euros which is amortization of past services cost is not provided in the given information so assuming it to be zero and amortization of the actual gains or losses accumulated oci at january 1, 2019 equals to 1 lakh euros which is already given so the post retirement benefit expense equals to post retirement benefit expense equals to 90 ,000 euros plus 68 ,400 euros minus 62 ,000 euros minus zero euros minus 1 lakh euros so which is equals to 96 ,400 euros therefore the post retirement benefit expense for 2019 therefore post retirement benefit expense for 2019 is 96 ,400 euros so the post retirement benefit expense represents the cost incurred by the company during the year related to its post retirement benefit plan so it includes the cost of employee services the interest cost on the defined benefit obligation the expected return on plan assets and any…

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