Question 1

'On-costs' can be described as:

Accepted Answer

A)   the additional monies owed to an employee for working overtime or on public holidays.
B)   the costs incurred by the employer that will be received by the employee once they move on.
C)   the extra costs incurred by the employer not directly received by the employee such as providing ergonomic equipment or an up-to-date computer.
D)   additional costs borne by the employer such as payroll tax and workers compensation insurance. D

Question 2

Discuss the implications of corporate collapses upon accrued employee benefits.

Accepted Answer

Corporate collapses can have significant implications for accrued employee benefits. When a company collapses, it often leads to financial instability, which can impact the ability of the company to fulfill its obligations towards its employees. This can result in a range of negative consequences for employees, including the potential loss of accrued benefits such as pensions, healthcare coverage, and other forms of compensation.

In many cases, employees may find themselves in a precarious position, especially if the company's collapse leads to bankruptcy or liquidation. This can result in a situation where employees are left with reduced or no access to the benefits they have accrued over years of service to the company. This can have a devastating impact on the financial security and well-being of employees, especially those who were relying on these benefits for their retirement or other long-term needs.

Furthermore, the collapse of a company can also have broader implications for the stability of pension funds and other employee benefit programs. If a company's collapse leads to a shortfall in funding for these programs, it can create significant challenges for employees and retirees who were depending on these benefits.

Overall, the implications of corporate collapses on accrued employee benefits are far-reaching and can have a profound impact on the lives of employees. It is essential for companies to prioritize the protection of employee benefits, and for regulators to implement measures to safeguard these benefits in the event of corporate collapse. Additionally, employees should be proactive in understanding their rights and options for protecting their accrued benefits in the face of corporate instability.

Question 3

In Australia,employee entitlements are protected in the case of company insolvency because:

Accepted Answer

A)   Employees are given first priority for payment after the taxation department and the company administrators.
B)   Employees are given some preferential access to payment, but after secured creditors.
C)   ASIC monitors companies' annual reports to ensure that their assets are greater than the total secured debt and employee entitlements.
D)   Employees are encouraged to withdraw their labour in the case of a company beginning to fail in order to minimise their loss of employee entitlements. B

Question 4

In relation to required disclosures,AASB 119 requires an entity to disclose the amount recognised as an expense for defined contribution plans.

Accepted Answer

A) True 
 B)False

Question 5

Explain why recording a surplus of the fair value of a defined benefit superannuation plan's assets over the present value of the accrued benefits,as an asset in the books of the employee may not be consistent with the AASB Framework.

Accepted Answer

The answer of Explain why recording a surplus of the...

Question 6

Entity A contributes to a defined benefit superannuation plan for its employees.It calculates the following:
$$\begin{array} { | l | l | } 
\hline \text { Current service cost } & 12785 \
\hline \text { Interest cost } & 983 \
\hline \text { Expected return on plan assets } & ( 1150 ) \
\hline \text { Net actuarial gain recognised in period } &\underline{( 1835)}  \
\hline & \underline{10783} \
\hline
\end{array}$$
The $10 783 represents:

Accepted Answer

A)   the expense to be recognised in the statement of comprehensive income.
B)   the asset to be recognised in the statement of financial position.
C)   the liability to be recognised in the statement of financial position.
D)   the revenue to be recognised in the statement of comprehensive income.

Question 7

Discuss the four steps involved in accounting for defined benefit funds.

Accepted Answer

The answer of Discuss the four steps involved in accounting...

Question 8

Short-term employee benefits are defined in AASB 119 as:

Accepted Answer

A)   benefits that are paid to employees while they are employed by the company making the payment.
B)   all payments made to an employee within 12 months of the date the employee rendered the service.
C)   the undiscounted value of wages, salaries and social security contributions to which the employer is presently obliged.
D)   employee benefits that are wholly due within 12 months after the end of the period in which the employee rendered the related service.

Question 9

When salaries and wages are capitalised as part of the costs of an asset,such as inventory:

Accepted Answer

A)   An expense will never be recognised for the salaries and wages.
B)   An expense will only be recognised when the employee takes leave.
C)   An expense is recognised as part of the cost of the inventory.
D)   An expense is finally recognised in the form of 'cost of goods sold'.

Question 10

Great Keppel Ltd provides defined superannuation benefits to two (2)of its employees,which represents an entitlement of three times their final salary on retirement.The company's superannuation plan is managed by Better Super Funds. The following details are relevant to the superannuation obligation of the company for the years ended 30 June 2011 and 2012:
Which of the following course of actions should Great Keppel Ltd take to comply with the accounting treatment on superannuation prescribed in AASB 119 Employee Benefits in preparation of the financial statements for the year ending 30 June 2012?
$$\begin{array} { | l | r | r | } 
\hline & 2011 & 2012 \
\hline \text { Fair value of plan assets, end } & \$ 265000 & \$ 290000 \
\hline \text { Expected return on plan assets for the year } & 8 \% & 8 \% \
\hline \text { Present value of superannuation obligation, end of year } & \$ 265000 & \$ 303390 \
\hline \text { Interest rate used to discount the defined benefit obligation } & 7 \% & 7 \% \
\hline \text { Current service cost } & & \$ 10000 \
\hline \text { Contributions made to Better Super Ltd } & & \$ 10000 \
\hline
\end{array}$$

Accepted Answer

A)   No action is necessary as the contribution of $10 000 was remitted to Better Super Ltd.
B)   No action is necessary as the assets and liabilities of the superannuation for its employees are managed by Better Super Ltd.
C)   Recognise a superannuation obligation of $13 390, being the difference between ending balance of plan assets and the present value of superannuation obligation as at 30 June 2012.
D)   Recognise a superannuation expense of $38 390 for the year 2012, being the difference between beginning and ending balance of the present value of superannuation obligation.

Question 11

For a defined benefit plan,if the fair value of the plan's assets match the expected payout to employees no further liabilities would exist.

Accepted Answer

A) True 
 B)False

Question 12

Non-vesting sick leave that has accumulated will be paid to employees when their employment ceases.

Accepted Answer

A) True 
 B)False

Question 13

In a defined benefit plan the differences between expected and actual returns on high quality bonds will lead to:

Accepted Answer

A)   any actuarial and investment risk moving from the employer to the employee.
B)   actuarial gains and losses.
C)   a change in the discount rate.
D)   none of the given answers.

Question 14

Discuss the causes of actuarial gains and losses for a defined benefit fund.

Accepted Answer

The answer of Discuss the causes of actuarial gains and...

Question 15

What are the two key types of superannuation plans discussed in AASB 119?
 Discuss the two types of plans and how they differ.

Accepted Answer

The answer of What are the two key types of...

Question 16

Dennis Carter works for Midrift Ltd and has taken his long-service leave this period.He was paid $2450 as his entitlement.What account(s)is/are debited in the entry to record this event?

Accepted Answer

A)   provision for long-service leave and PAYG tax deduction
B)   provision for long-service leave
C)   long-service leave expense
D)   long-service leave expense and PAYG tax deduction

Question 17

Danish Ltd has an average weekly payroll of $200 000.The employees are entitled to 2 weeks',non-vesting sick leave per annum.Past experience suggests that 56% of employees will take the full 2 weeks' sick leave and 22% will take 1 week's leave each year.The rest of the employees take no sick leave.In the current week an employee with a weekly salary of $600 has been off sick for the first time this year.The employee took 2 days off out of her normal 5-day working week.Assuming that a weekly entry has been made to record the accumulated liability for sick leave and that PAYG tax is deducted at 30%,what would the entry be to record the employee's weekly salary (round amounts to the nearest dollar)?

Accepted Answer

A)   Dr Sick leave expense 240Dr PAYG tax 72Cr Provision for sick leave 312\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & 	ext { Sick leave expense } & 240 & \\hline \mathrm { Dr } & 	ext { PAYG tax } & 72 & \\hline \mathrm { Cr } & 	ext { Provision for sick leave } & & 312 \\hline\end{array}DrDrCr​ Sick leave expense  PAYG tax  Provision for sick leave ​24072​312​​ 
B)   Dr Provision for sick leave 240Dr Salaries and wages 360Cr PAYG tax payable 180Cr Cash 420\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & 	ext { Provision for sick leave } & 240 & \\hline \mathrm { Dr } & 	ext { Salaries and wages } & 360 & \\hline \mathrm { Cr } & 	ext { PAYG tax payable } & & 180 \\hline \mathrm { Cr } & 	ext { Cash } & & 420 \\hline\end{array}DrDrCrCr​ Provision for sick leave  Salaries and wages  PAYG tax payable  Cash ​240360​180420​​ 
C)   Dr Sick leave expense 171Dr Salaries and wages 429Cr PAYG tax payable 142Cr Cash 458\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & 	ext { Sick leave expense } & 171 & \\hline \mathrm { Dr } & 	ext { Salaries and wages } & 429 & \\hline \mathrm { Cr } & 	ext { PAYG tax payable } & & 142 \\hline \mathrm { Cr } & 	ext { Cash } & & 458 \\hline\end{array}DrDrCrCr​ Sick leave expense  Salaries and wages  PAYG tax payable  Cash ​171429​142458​​ 
D)   Dr Salaries and wages 360Dr PAYG tax deduction 108Cr Cash 468\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & 	ext { Salaries and wages } & 360 & \\hline \mathrm { Dr } & 	ext { PAYG tax deduction } & 108 & \\hline \mathrm { Cr } & 	ext { Cash } & & 468 \\hline\end{array}DrDrCr​ Salaries and wages  PAYG tax deduction  Cash ​360108​468​​

Question 18

If there is no deep market for high quality corporate bonds,AASB 119 Employee Benefits permits the use of market yields on government bonds at a discount rate to determine the present value of a defined benefit obligation.

Accepted Answer

A) True 
 B)False

Question 19

Any employee benefits that have been earned but not paid as at the reporting date are assets of the employer.

Accepted Answer

A) True 
 B)False

Question 20

Sick leave may be classified as:

Accepted Answer

A)   cumulative vesting.
B)   cumulative non-vesting.
C)   non-cumulative vesting.
D)   all of the given answers.

Exam 12: Accounting for Employee Benefits

'On-costs' can be described as:

Discuss the implications of corporate collapses upon accrued employee benefits.

In Australia,employee entitlements are protected in the case of company insolvency because:

In relation to required disclosures,AASB 119 requires an entity to disclose the amount recognised as an expense for defined contribution plans.

Explain why recording a surplus of the fair value of a defined benefit superannuation plan's assets over the present value of the accrued benefits,as an asset in the books of the employee may not be consistent with the AASB Framework.

Discuss the four steps involved in accounting for defined benefit funds.

Short-term employee benefits are defined in AASB 119 as:

When salaries and wages are capitalised as part of the costs of an asset,such as inventory:

For a defined benefit plan,if the fair value of the plan's assets match the expected payout to employees no further liabilities would exist.

Non-vesting sick leave that has accumulated will be paid to employees when their employment ceases.

In a defined benefit plan the differences between expected and actual returns on high quality bonds will lead to:

Discuss the causes of actuarial gains and losses for a defined benefit fund.

What are the two key types of superannuation plans discussed in AASB 119? Discuss the two types of plans and how they differ.

Dennis Carter works for Midrift Ltd and has taken his long-service leave this period.He was paid $2450 as his entitlement.What account(s) is/are debited in the entry to record this event?

If there is no deep market for high quality corporate bonds,AASB 119 Employee Benefits permits the use of market yields on government bonds at a discount rate to determine the present value of a defined benefit obligation.

Any employee benefits that have been earned but not paid as at the reporting date are assets of the employer.

Sick leave may be classified as: