Question 1

For a defined contribution plan to satisfy the reporting requirements of AAS 25 it must provide:

Accepted Answer

A)  a statement of financial position, an operating statement and accompanying notes. 
B)  a statement of financial position, an operating statement and a statement of cash flows. 
C)  a statement of net assets, a statement of changes in net assets and accompanying notes. 
D)  a statement of financial position, an operating statement and accompanying notes or a statement of net assets, a statement of changes in net assets and accompanying notes. 
A)  a statement of financial position, an operating statement and accompanying notes. 
B)  a statement of financial position, an operating statement and a statement of cash flows. 
C)  a statement of net assets, a statement of changes in net assets and accompanying notes. 
D)  a statement of financial position, an operating statement and accompanying notes or a statement of net assets, a statement of changes in net assets and accompanying notes.

Question 2

A defined benefit superannuation plan is required to provide additional disclosures in the actuarial report most recently prepared for the plan.These disclosures include:

Accepted Answer

A)  the opinion of the actuary as to the financial condition of the plan at balance date. 
B)  the trustee's opinion of the qualification of the actuary. 
C)  the fees paid to the actuary. 
D)  the trustee's opinion of the qualification of the actuary and the fees paid to the actuary. 
A)  the opinion of the actuary as to the financial condition of the plan at balance date. 
B)  the trustee's opinion of the qualification of the actuary. 
C)  the fees paid to the actuary. 
D)  the trustee's opinion of the qualification of the actuary and the fees paid to the actuary.

Question 3

AAS 25 is relevant for superannuation plans that are reporting entities.A reporting entity is one for which:

Accepted Answer

A)  A minimum of 25 per cent of the members of the fund have voted in favour of the provision of general purpose financial reports. 
B)  It is reasonable to expect the existence of users who are dependent on general purpose financial reports for information that will be useful for them for making and evaluating decisions about the allocation of scarce resources. 
C)  There has not been a vote carried by 75 per cent or more of the members releasing the trustees from the responsibility to provide general purpose financial reports. 
D)  It is reasonable to expect the existence of users who need specific purpose reports in order to make and evaluate decisions about the allocation of scarce resources. 
A)  A minimum of 25 per cent of the members of the fund have voted in favour of the provision of general purpose financial reports. 
B)  It is reasonable to expect the existence of users who are dependent on general purpose financial reports for information that will be useful for them for making and evaluating decisions about the allocation of scarce resources. 
C)  There has not been a vote carried by 75 per cent or more of the members releasing the trustees from the responsibility to provide general purpose financial reports. 
D)  It is reasonable to expect the existence of users who need specific purpose reports in order to make and evaluate decisions about the allocation of scarce resources.

Question 4

The purpose of all superannuation plans is to guarantee a specified level of retirement,death or disability benefits for members of the plan.

Accepted Answer

A) True 
 B)False

Question 5

A contributory superannuation plan is one in which:

Accepted Answer

A)  the employer contributes periodic payments to the trust fund. 
B)  the employees contribute periodic payments to the trust fund. 
C)  the government contributes a percentage of the employees' contribution. 
D)  the benefits accumulate at a compound rate. 
A)  the employer contributes periodic payments to the trust fund. 
B)  the employees contribute periodic payments to the trust fund. 
C)  the government contributes a percentage of the employees' contribution. 
D)  the benefits accumulate at a compound rate.

Question 6

The following information relates to the Montigo Superannuation Plan,which is a defined benefit scheme.Amounts given for all assets are at net market value. $$\begin{array} { | l | r | r | } 
\hline & \text { Year ended } & \text { Year ended } \
\hline & \text { 30 June 2014 } & \text { 30 June 2015 } \
\hline & \text { (\$000) } & \text { (\$000) } \
\hline \text { Government securities } & 4900 & 3600 \
\hline \text { Mortgage loans } & 7100 & 8500 \
\hline \text { Shares in listed companies } & 9000 & 10250 \
\hline \text { Fixtures and fittings } & 19 & 17 \
\hline & & \
\hline \text { Other information } & (\$000)& \
\hline \text { Cash } &45 \
\hline \text { Accounts payable } & 60 & \
\hline \text { Benefits paid } & 110 & \
\hline \text { Investment expenses } & 12 & \
\hline \text { General and administration expenses } & 48 & \
\hline \text { Interest received } & 1000 & \
\hline \text { Dividends received } & 800 & \
\hline \text { Members' contributions received } & 95 & \
\hline \text { Employers' contributions received } & 210 & \
\hline
\end{array}$$ At balance date the scheme is owed from the current period. $$\begin{array} { | l | r | } 
\hline \text { Interest } & \$ 42000 \
\hline \text { Dividends } & \$ 59000 \
\hline \text { Contributions from members } & \$ 17000 \
\hline \text { Contributions from employers } & \$ 28000 \
\hline
\end{array}$$ During the period shares in listed companies that had a net realisable value of $7 million at the beginning of the period were sold for $8.5 million.Shares were purchased during the period for $3 million. The fund has not had an actuarial review undertaken as at balance date.What are the net assets available to pay benefits at 30 June 2015?

Accepted Answer

A)  $22 290 000 
B)  $22 498 000 
C)  $22 453 000 
D)  $26 998 000 
A)  $22 290 000 
B)  $22 498 000 
C)  $22 453 000 
D)  $26 998 000

Question 7

What is the accounting treatment for sale of non-current assets in a superannuation plan?

Accepted Answer

AAS 25 requires the use of net market va

Question 8

AAS 25 permits use of cost or revalued basis in measuring assets of a defined contribution plan and a defined benefit plan.

Accepted Answer

A) True 
 B)False

Question 9

The following information relates to the Old Fogey's Superannuation Plan,which is a defined benefit scheme.Amounts given for all assets are at net market value. $$\begin{array} { | l | r | r | } 
\hline & \text { Year ended } & \text { Year ended } \
\hline & 30 \text { June 2014 } & \text { 30 June 2015 } \
\hline & ( \$ 000 ) & ( \$ 000 ) \
\hline \text { Government securities } & 8600 & 7500 \
\hline \text { Mortgage loans } & 2500 & 3125 \
\hline \text { Shares in listed companies } & 11000 & 12500 \
\hline \text { Fixtures and fitting } & 275 & 250 \
\hline & & \
\hline \text { Other information } & \text { (\$000) } & \
\hline \text { Cash } & 50 & \
\hline \text { Accounts payable } & 40 & \
\hline \text { Benefits paid } & 95 & \
\hline \text { Investment expenses } & 19 & \
\hline \text { General and administration expenses } & 50 & \
\hline \text { Interest received } & 940 & \
\hline \text { Dividends received } & 20 & \
\hline \text { Members' contributions received } & 87 & \
\hline \text { Employers' contributions received } & 174 & \
\hline
\end{array}$$ At balance date the scheme is owed from the current period. $$\begin{array} { | l | r | } 
\hline \text { Interest } & \$ 51000 \
\hline \text { Dividends } & \$ 65000 \
\hline \text { Contributions from members } & \$ 6000 \
\hline \text { Contributions from employers } & \$ 12000 \
\hline
\end{array}$$ During the period shares in listed companies that had a net realisable value of $5 million at the beginning of the period were sold for $6.2 million.Shares were purchased during the period for $2 million. Actuarial reports on the fund are undertaken annually at balance date.The actuarial estimate of the accrued benefits were:
$$\begin{array} { | l | l | } 
\hline 30 \text { June 2000: } & \$ 44100000 \
\hline 30 \text { June 2013: } & \$ 52300000 \
\hline
\end{array}$$ What is the total revenue for the plan for the period ended 30 June 2015?

Accepted Answer

A)  $6 555 000 
B)  $2 709 000 
C)  $8 200 000 
D)  $1 685 000 
A)  $6 555 000 
B)  $2 709 000 
C)  $8 200 000 
D)  $1 685 000

Question 10

According to AAS 25,beneficiaries of a defined contribution plan will be interested in evaluating:

Accepted Answer

A)  the performance of trust management in preserving the plan's assets. 
B)  the plan's ability to meet its obligations to members and beneficiaries. 
C)  the plan's ability to meet its debts as they fall due. 
D)  the plan's ability to provide an adequate level of benefits for members and beneficiaries. 
A)  the performance of trust management in preserving the plan's assets. 
B)  the plan's ability to meet its obligations to members and beneficiaries. 
C)  the plan's ability to meet its debts as they fall due. 
D)  the plan's ability to provide an adequate level of benefits for members and beneficiaries.

Question 11

Happy Days Superannuation Plan provides the following information regarding its assets and receipts for the year ended 30 June 2014:   During the period land acquired before 30 June 2013 was sold.The land had a cost of $4 million,a market value at 30 June 2013 of $4.5 million,and was sold for $6 million.What is the revenue of the superannuation plan for the period in accordance with AAS 25?

Accepted Answer

A)  $12 600 000 
B)  $6 585 750 
C)  $11 081 000 
D)  $6 581 000 
A)  $12 600 000 
B)  $6 585 750 
C)  $11 081 000 
D)  $6 581 000

Question 12

The accounting treatment for the sale of non-current assets by a superannuation fund involves the following steps:

Accepted Answer

A)  Update the asset's depreciation expense; calculate the gain or loss by comparing the proceeds from sale with the asset's carrying amount. 
B)  Update the asset's depreciation expense; perform impairment test; calculate the gain or loss by comparing the assets carrying amount with proceeds from sale. 
C)  Revalue the asset to its net market value immediately prior to sale and recognise changes as part of revenue; calculate the gain or loss by comparing the assets carrying amount with proceeds from sale. 
D)  Revalue the asset to its net market value immediately prior to sale and recognise changes as part of revenue; recognise sale of non-current assets. 
A)  Update the asset's depreciation expense; calculate the gain or loss by comparing the proceeds from sale with the asset's carrying amount. 
B)  Update the asset's depreciation expense; perform impairment test; calculate the gain or loss by comparing the assets carrying amount with proceeds from sale. 
C)  Revalue the asset to its net market value immediately prior to sale and recognise changes as part of revenue; calculate the gain or loss by comparing the assets carrying amount with proceeds from sale. 
D)  Revalue the asset to its net market value immediately prior to sale and recognise changes as part of revenue; recognise sale of non-current assets.

Question 13

In what way is the asset measurement requirement in AAS 25 Financial Reporting by Superannuation Plans inconsistent with the treatment required in AASB 1023 Financial Reporting of General Insurance Activities?

Accepted Answer

A)  The requirement in AAS 25 is to measure assets at net market value whereas AASB 1023 requires the application of net realisable value. 
B)  AAS 25 requires market values to be used for all investments, whereas in AASB 1023 market values are required for investments integral to the entity's general insurance activities. 
C)  AAS 25 requires the use of market values whereas AASB 1023 requires the use of modified historical cost. 
D)  The requirement in AAS 25 relates to all assets of the entity, whereas in AASB 1023 it relates only to investments integral to the entity's general insurance activities. 
A)  The requirement in AAS 25 is to measure assets at net market value whereas AASB 1023 requires the application of net realisable value. 
B)  AAS 25 requires market values to be used for all investments, whereas in AASB 1023 market values are required for investments integral to the entity's general insurance activities. 
C)  AAS 25 requires the use of market values whereas AASB 1023 requires the use of modified historical cost. 
D)  The requirement in AAS 25 relates to all assets of the entity, whereas in AASB 1023 it relates only to investments integral to the entity's general insurance activities.

Question 14

According to AAS 25,superannuation plans must provide a statement of financial position,an operating statement and a statement of cash flows in which of the following situations?

Accepted Answer

A)  In the case of a defined contribution fund; if it has had an actuarial assessment of the accrued benefits owed to members in the current period it must provide these reports. 
B)  In the case of a defined benefit plan; the trustees may choose to provide these statements if they have had an actuarial review of the accrued benefits at balance date. 
C)  In the case of a defined contribution fund these reports are required if the plan is a reporting entity. 
D)  In the case of a defined benefit plan; the trustees may choose to provide these statements if they have had an actuarial review of the accrued benefits at balance date and in the case of a defined contribution fund these reports are required if the plan is a reporting entity. 
A)  In the case of a defined contribution fund; if it has had an actuarial assessment of the accrued benefits owed to members in the current period it must provide these reports. 
B)  In the case of a defined benefit plan; the trustees may choose to provide these statements if they have had an actuarial review of the accrued benefits at balance date. 
C)  In the case of a defined contribution fund these reports are required if the plan is a reporting entity. 
D)  In the case of a defined benefit plan; the trustees may choose to provide these statements if they have had an actuarial review of the accrued benefits at balance date and in the case of a defined contribution fund these reports are required if the plan is a reporting entity.

Question 15

In the case of a defined benefit plan,the statements the trustees must provide if a detailed actuarial review has not been conducted at balance date include:

Accepted Answer

A)  an operating statement and a statement of financial position. 
B)  a statement of net assets and an operating statement. 
C)  a statement of changes in net assets and a statement of net assets. 
D)  a statement of changes in net assets and a statement of financial position. 
A)  an operating statement and a statement of financial position. 
B)  a statement of net assets and an operating statement. 
C)  a statement of changes in net assets and a statement of net assets. 
D)  a statement of changes in net assets and a statement of financial position.

Question 16

Accounting standards regulate the provision of reports by superannuation plans,including information on the performance and position of the plan and individual members' contributions and entitlements.

Accepted Answer

A) True 
 B)False

Question 17

The discount rate that AAS 25 recommends for use is:

Accepted Answer

A)  a current, market-determined, risk-adjusted discount rate appropriate to the plan. 
B)  the inflation-adjusted, current, risk-free government bond rate. 
C)  the rate of return earned by high quality corporate bonds. 
D)  the rate of interest charged by banks on loans with matching maturities to the accrued benefits. 
A)  a current, market-determined, risk-adjusted discount rate appropriate to the plan. 
B)  the inflation-adjusted, current, risk-free government bond rate. 
C)  the rate of return earned by high quality corporate bonds. 
D)  the rate of interest charged by banks on loans with matching maturities to the accrued benefits.

Question 18

When a member remains in a defined benefit plan until retirement,the amount paid out is determined by reference to their contributions and investment earnings thereon.

Accepted Answer

A) True 
 B)False

Question 19

Discuss the disclosure requirements for defined benefit plans.

Accepted Answer

A defined contribution plan is required

Question 20

Maestro Superannuation Plan provides the following information relating to the period ended 30 June 2014: $$\begin{array} { | l | r | } 
\hline \text { Gross benefit payment to an individual based on an actuarial analysis as at 30 June } 2014 & \$ 260000 \
\hline \text { Commonwealth government guaranteed securities } & 4 \% \
\hline \text { Current anticipated rate of return on assets (for the period of the benefit liability) } & 7 \% \
\hline \text { Quality corporate bond rate for the period of the benefit liability } & 6 \% \
\hline
\end{array}$$ The actuarial assumption used to calculate the liability was that the individual would take the benefit as a lump sum on retirement in 9 years' time.What is the present value of the expected future benefit payment (rounded to the nearest dollar)?

Accepted Answer

A)  $153 894 
B)  $182 673 
C)  $141 423 
D)  $39 907 
A)  $153 894 
B)  $182 673 
C)  $141 423 
D)  $39 907

Exam 22: Accounting for Superannuation Plans

For a defined contribution plan to satisfy the reporting requirements of AAS 25 it must provide:

A defined benefit superannuation plan is required to provide additional disclosures in the actuarial report most recently prepared for the plan.These disclosures include:

AAS 25 is relevant for superannuation plans that are reporting entities.A reporting entity is one for which:

The purpose of all superannuation plans is to guarantee a specified level of retirement,death or disability benefits for members of the plan.

A contributory superannuation plan is one in which:

What is the accounting treatment for sale of non-current assets in a superannuation plan?

AAS 25 permits use of cost or revalued basis in measuring assets of a defined contribution plan and a defined benefit plan.

According to AAS 25,beneficiaries of a defined contribution plan will be interested in evaluating:

The accounting treatment for the sale of non-current assets by a superannuation fund involves the following steps:

In what way is the asset measurement requirement in AAS 25 Financial Reporting by Superannuation Plans inconsistent with the treatment required in AASB 1023 Financial Reporting of General Insurance Activities?

According to AAS 25,superannuation plans must provide a statement of financial position,an operating statement and a statement of cash flows in which of the following situations?

In the case of a defined benefit plan,the statements the trustees must provide if a detailed actuarial review has not been conducted at balance date include:

Accounting standards regulate the provision of reports by superannuation plans,including information on the performance and position of the plan and individual members' contributions and entitlements.

The discount rate that AAS 25 recommends for use is:

When a member remains in a defined benefit plan until retirement,the amount paid out is determined by reference to their contributions and investment earnings thereon.

Discuss the disclosure requirements for defined benefit plans.

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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