Question 1

Superannuation funds are monitored and regulated by the Australian Vigilance Regulation Authority and the Australian Securities and Investments Commission.

Accepted Answer

A) True 
 B)False

Question 2

The disclosure requirements for a defined contribution plan include:

Accepted Answer

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

Question 3

AAS 25 Financial Reporting by Superannuation Plans deals with accounting in an employer's financial reports for employee entitlements,including retirement benefits.

Accepted Answer

A) True 
 B)False

Question 4

Use of professional judgment to establish the net market values of assets is not permitted on which of the following matters?

Accepted Answer

A)  market price of unquoted securities 
B)  discount factor to use for long-term monetary assets 
C)  market price of quoted securities 
D)  costs of expected disposal 
A)  market price of unquoted securities 
B)  discount factor to use for long-term monetary assets 
C)  market price of quoted securities 
D)  costs of expected disposal

Question 5

For a defined contribution plan and a defined benefit plan,the changes in net market values of the plan's financial liabilities since the beginning of the reporting period shall be included in the profit or loss for the reporting period.

Accepted Answer

A) True 
 B)False

Question 6

AAS 25 requires that all the assets of superannuation plans be measured at:

Accepted Answer

A)  net market value. 
B)  replacement cost . 
C)  historical cost. 
D)  net realisable value. 
A)  net market value. 
B)  replacement cost . 
C)  historical cost. 
D)  net realisable value.

Question 7

The argument in support of AAS 25's selected method of measuring assets for superannuation plans is that:

Accepted Answer

A)  Reliability is important to members of a plan because they are relying on the plan for income in their retirement. 
B)  It is more relevant to the users. 
C)  Using a market measure introduces subjectivity into the financial reports. 
D)  Reliability is important to members of a plan because they are relying on the plan for income in their retirement and it is more relevant to the users. 
A)  Reliability is important to members of a plan because they are relying on the plan for income in their retirement. 
B)  It is more relevant to the users. 
C)  Using a market measure introduces subjectivity into the financial reports. 
D)  Reliability is important to members of a plan because they are relying on the plan for income in their retirement and it is more relevant to the users.

Question 8

Long-lived 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 $1 million,a market value at 30 June 2013 of $2 million,and was sold for $2.8 million.What is the revenue of the superannuation plan for the period in accordance with AAS 25?

Accepted Answer

A)  $3 700 000 
B)  $3 678 000 
C)  $2 676 500 
D)  $1 678 000 
A)  $3 700 000 
B)  $3 678 000 
C)  $2 676 500 
D)  $1 678 000

Question 9

According to AAS 25,the revenue of a superannuation fund should include the changes in net market value of all plan assets over the period.

Accepted Answer

A) True 
 B)False

Question 10

Maestro Superannuation Plan provides the following information relating to the period ended 30 June 2014: $$\begin{array} { | l | r | } 
\hline \text { Gross benefit payment to an individual based on an actuarial analysis as at 30 June } 2014 & \$ 370000 \
\hline \text { Commonwealth government guaranteed securities } & 4 \% \
\hline \text { Current anticipated rate of return on assets (for the period of the benefit liability) } & 6 \% \
\hline \text { Quality corporate bond rate for the period of the benefit liability } & 5 \% \
\hline
\end{array}$$ The actuarial assumption used to calculate the liability was that the individual would take the benefit as a lump sum on retirement in 8 years' time.What is the present value of the expected future benefit payment (rounded to the nearest dollar)?

Accepted Answer

A)  $270 355 
B)  $232 142 
C)  $250 430 
D)  $349 056 
A)  $270 355 
B)  $232 142 
C)  $250 430 
D)  $349 056

Question 11

Contrast the measurement rules that apply to assets of superannuation funds from assets held for backing general insurance liabilities.What effects would these have on the qualitative characteristics of financial reports.

Accepted Answer

The measurement rules that apply to asse

Question 12

A defined benefit plan is also known as an accumulation fund.

Accepted Answer

A) True 
 B)False

Question 13

Contrast the measurement of assets as required in AAS 25 for superannuation funds with that required in AASB 1023 for general insurers.

Accepted Answer

AAS 25 requires that,for both defined be

Question 14

Maestro Superannuation Plan provides the following information relating to the period ended 30 June 2014: $$\begin{array} { | l | r | } 
\hline \text { Gross benefit payment to an individual based on an actuarial analysis as at 30 June } 2014 & \$ 400000 \
\hline \text { Commonwealth government guaranteed securities } & 5 \% \
\hline \text { Current anticipated rate of return on assets (for the period of the benefit liability) } & 8 \% \
\hline \text { Quality corporate bond rate for the period of the benefit liability } & 7 \% \
\hline
\end{array}$$ The actuarial assumption used to calculate the liability was that the individual would take the benefit as a lump sum on retirement in 10 years' time.What is the present value of the expected future benefit payment (rounded to the nearest dollar)?

Accepted Answer

A)  $245 565 
B)  $203 339 
C)  $185 277 
D)  $370 370 
A)  $245 565 
B)  $203 339 
C)  $185 277 
D)  $370 370

Question 15

The revenue recognition and asset valuation methods specified in AAS 25 are likely to increase the volatility of reported earnings.This is because:

Accepted Answer

A)  Revenue is to be recognised when it is received and depreciation is to be calculated on a units-of-usage basis. 
B)  The short-term variation in market prices of assets intended to be held long-term are reported as revenues or expenses each year. 
C)  The asset valuation is to be based on the lower of cost and net realisable value, so that there are often lump-sum write-offs to the statement of comprehensive income. 
D)  Preparers of accounts for superannuation plans argue that the revenues should be smoothed over a 7-year period rather than all reported as earned in a period. 
A)  Revenue is to be recognised when it is received and depreciation is to be calculated on a units-of-usage basis. 
B)  The short-term variation in market prices of assets intended to be held long-term are reported as revenues or expenses each year. 
C)  The asset valuation is to be based on the lower of cost and net realisable value, so that there are often lump-sum write-offs to the statement of comprehensive income. 
D)  Preparers of accounts for superannuation plans argue that the revenues should be smoothed over a 7-year period rather than all reported as earned in a period.

Question 16

The required disclosures for a defined benefit plan include:

Accepted Answer

A)  a statement of comprehensive income and a statement of financial position. 
B)  a note disclosure of the liability for accrued benefits and the date at which it was measured. 
C)  an operating statement. 
D)  a note disclosure of the liability for accrued benefits and the date at which it was measured and an operating statement. 
A)  a statement of comprehensive income and a statement of financial position. 
B)  a note disclosure of the liability for accrued benefits and the date at which it was measured. 
C)  an operating statement. 
D)  a note disclosure of the liability for accrued benefits and the date at which it was measured and an operating statement.

Question 17

AAS 25 requires a defined benefit plan to append to its financial statements an actuarial report that contains the following information:

Accepted Answer

A)  the effective date of the report. 
B)  the name and qualifications of the actuary. 
C)  the relationship of the market value of the net assets to meet accrued benefits of the plan at the date of valuation of the plan's assets. 
D)  all of the given answers. 
A)  the effective date of the report. 
B)  the name and qualifications of the actuary. 
C)  the relationship of the market value of the net assets to meet accrued benefits of the plan at the date of valuation of the plan's assets. 
D)  all of the given answers.

Exam 22: Accounting for Superannuation Plans

Superannuation funds are monitored and regulated by the Australian Vigilance Regulation Authority and the Australian Securities and Investments Commission.

The disclosure requirements for a defined contribution plan include:

AAS 25 Financial Reporting by Superannuation Plans deals with accounting in an employer's financial reports for employee entitlements,including retirement benefits.

Use of professional judgment to establish the net market values of assets is not permitted on which of the following matters?

For a defined contribution plan and a defined benefit plan,the changes in net market values of the plan's financial liabilities since the beginning of the reporting period shall be included in the profit or loss for the reporting period.

AAS 25 requires that all the assets of superannuation plans be measured at:

The argument in support of AAS 25's selected method of measuring assets for superannuation plans is that:

According to AAS 25,the revenue of a superannuation fund should include the changes in net market value of all plan assets over the period.

Contrast the measurement rules that apply to assets of superannuation funds from assets held for backing general insurance liabilities.What effects would these have on the qualitative characteristics of financial reports.

A defined benefit plan is also known as an accumulation fund.

Contrast the measurement of assets as required in AAS 25 for superannuation funds with that required in AASB 1023 for general insurers.

The revenue recognition and asset valuation methods specified in AAS 25 are likely to increase the volatility of reported earnings.This is because:

The required disclosures for a defined benefit plan include:

AAS 25 requires a defined benefit plan to append to its financial statements an actuarial report that contains the following information:

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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