The following information is available for HTM Corporation’s defined benefit pension plan:
2023
2024
2025
Defined benefit obligation, opening balance, accounting basis
$175,000
?
?
Fair value of plan assets
165,000
?
?
Current service cost
35,000
$47,250
$52,500
Discount rate
7%
7%
7%
Actual return earned on plan assets
8%
6%
7%
Contributions (funding)
44,000
44,000
44,000
Benefits paid to retirees
24,000
26,000
28,000
On January 1, 2023, HTM amended its pension plan, resulting in past service costs with a present value of $78,000.
Instructions
Calculate the pension plan’s surplus or deficit and the pension liability or asset reported on the December 31, 2023, 2024, and 2025 statements of financial position assuming that HTM accounts for its pension plan under ASPE. Round to the nearest dollar.
Calculate all the components, and the total defined benefit expense for 2023, 2024, and 2025, assuming that HTM accounts for its pension plan under ASPE. Identify the pension plan’s surplus or deficit and the pension liability or asset reported on the December 31, 2023, 2024, and 2025 statements of financial position assuming that HTM accounts for its pension plan under IFRS. Calculate defined benefit expense and any remeasurement (gain) loss— for 2023, 2024, and 2025 assuming that HTM accounts for its pension plan under IFRS. Round to the nearest dollar. Compare the results obtained in parts (b) and (d). Comment. Which method results in a better measure of expense over the three-year period?
An icon reads, Digging Deeper. Which method results in a better measure of the plan surplus or deficit that is reported on the SFP?
