Question bank — IAS 19 — Employee Benefits
82 questions in FR/EN/ES, scored by the real scoring engine.
The four categories of benefits3 questions
- Orvale SA grants several benefits to its employees. Which of these pairings of a benefit with its employee-benefit category is correct?Single choiceL1
- An annual bonus that pays for the year's services and is paid in March of the following year is an other long-term benefit, since payment falls after the reporting date.True / falseL1
- Orion SA grants its employees a jubilee benefit paid after 25 years of service; it is not expected to be settled wholly within twelve months after the end of the annual reporting period in which the related service is rendered (case facts). In which category of employee benefits does IAS 19 place this benefit?Single choiceL1
What is excluded from the scope1 question
The undiscounted accrual2 questions
- The December salaries of Pelmont SA, payable on 10 January, are recognised at the 31 December reporting date at their undiscounted amount: the settlement period is too short to justify discounting.True / falseL1
- Delmar SA closes its books on 31 December. December salaries (…), December overtime (…) and the transport allowance due for December (…) will be paid on 8 January. January salaries (…) will pay for services of the following year. Calculate the short-term benefit liability to recognise at 31 December, without discounting.CalculationL2
Compensated absences2 questions
- Evrard SA has two paid-absence schemes: annual leave not taken, which can be carried forward to the following year, and sick leave, which does not accumulate and is paid only when an absence actually occurs. At the reporting date, 1,200 days of annual leave are carried forward and no employee is on sick leave. Which treatment is correct at the reporting date?Single choiceL2
- Carvin SA has carried forward accumulating paid leave to the following year. The cost the entity expects to bear for the carried-forward days is … for the workshop, … for the offices and … for logistics. Two other amounts appear in the file: …, the cost of non-accumulating sick leave taken in December and already expensed, and …, the cost of days earned that expire on 31 December with no carry-forward possible (case data). Calculate the liability to recognise at the reporting date for accumulating absences.CalculationL2
Bonuses and profit-sharing3 questions
- Garnel SA has paid for eight years an annual bonus equal to one month's salary, announced in December by an internal note, with no contractual clause or written commitment. In N, the board decided no withdrawal and management is not considering one; the formula (one month's salary) is known (case facts). Which conclusion is correct at the end of N?Single choiceL2
- Ulvane SA closes its year on 31 December N. In November N, before the reporting date, management decided and communicated to employees a year-end bonus of …, payable in February N+1; the obligation is established and the amount is reliable. Post the closing entry for N.Journal entryL2
- The bonus plan of Joran SA provides for a bonus equal to … of profit after bonus. The profit for the year before bonus is …. The constructive obligation is established and the amount can be estimated reliably (case facts). Calculate the profit after bonus, then the bonus to recognise at the reporting date.CalculationL3
Defined contribution or defined benefit4 questions
- Whenever the assets of a retirement plan are held in a fund legally separate from the employer, the plan is a defined contribution plan.True / falseL1
- Lunor SA pays each year 5% of salaries into a separate fund, which pays each retiree a pension equal to 1.5% of the final salary per year of service. The rules provide that Lunor tops up the fund if its assets are not enough to pay the promised pensions (case facts). Which classification is correct?Single choiceL2
- Mervaux SA pays each year to an independent insurer a fixed contribution equal to 4% of pensionable salaries, that is 96,000 for the year, for its employees' retirement. The contract imposes no obligation on Mervaux to pay more if the benefits promised to employees turn out to be insufficient, and Mervaux has no constructive obligation to that effect (case facts). Write a short justification of the classification of the plan and of the expense for the year, distinguishing rule, case facts and conclusion.JudgmentL2
- Each year, Sirius SA pays an insurer a contribution equal to 5 % of salaries; the insurer then pays the retirement pensions. The contract provides that Sirius pays additional contributions if the accumulated assets are insufficient to pay the promised pensions (case facts). How is this plan classified under IAS 19?Single choiceL2
Accounting for defined contributions2 questions
- Dalen SA takes part in a defined contribution plan: it must pay 6% of the year's salaries and has no legal or constructive obligation to pay more (case facts). Its expense for the year equals the contributions due for services rendered during the year, and it does not provide for future benefits.True / falseL1
- Nordane SA takes part in a defined contribution plan and pays … of pensionable salaries, with no other commitment (case facts). For the year, pensionable salaries amount to …; total payroll is …, because it includes bonuses that the plan rules exclude from the base. Calculate the expense for the year in respect of the plan.CalculationL2
Multi-employer plans2 questions
- Sablet SA takes part in an industry-wide multi-employer plan that promises defined benefits to the employees of several companies. The plan administrator does not give Sablet the information needed to determine its share of the obligation, the assets and the cost (case facts). Which treatment is consistent in Sablet's accounts?Single choiceL2
- Tarnel SA takes part in two multi-employer plans that promise defined benefits based on final salary. North plan: the administrator sends Tarnel each year its share of the obligation, the assets and the cost, prepared on a consistent and reliable basis. South plan: the administrator provides only the amount of contributions due (case facts). Write a note that determines the treatment of each plan and highlights what is a matter of professional judgement.JudgmentL3
State plans1 question
Insured benefits1 question
The net defined benefit liability (asset)3 questions
- The deficit of a defined benefit plan is the present value of the defined benefit obligation, less the fair value of plan assets where there are any.True / falseL1
- At 31 December, Bastide SA measures the obligation of its defined benefit plan at … (present value) and the fair value of plan assets at …. The asset ceiling is not an issue (case data). Calculate the net defined benefit liability to present in the statement of financial position.CalculationL2
- Corvane SA measures the obligation of its defined benefit plan at 7,850,000 (present value) and the fair value of plan assets at 8,300,000. The present value of the economic benefits available as refunds or reductions in future contributions, the asset ceiling, is 600,000 (case data). What does Corvane present in its statement of financial position for this plan?Single choiceL2
The projected unit credit method3 questions
- Which sentence correctly describes the projected unit credit method used to measure the obligation of a defined benefit plan?Single choiceL2
- A trainee describes how he measures the obligation of a defined benefit plan for an employee with ten years of service, who will retire in twenty years. Which of his steps is wrong?Single choiceL2
- According to the case actuary's data, an employee of Dalmont SA will receive in …, on retirement, a projected lump sum of … (projected final salary included). Twelve years of service out of thirty have been rendered at the measurement date, that is … of total service. As a teaching assumption of the case, the benefit is attributed on a straight-line basis to years of service; no leaving or death before retirement is assumed, and the discount rate is … (case data). Calculate the benefit attributed to services rendered, then its present value.CalculationL3
Attribution to periods of service2 questions
- The plan formula of Halvern SA, case data, pays each employee, on retirement, a lump sum of … per year of service completed in the entity. An employee has completed … at the measurement date and is expected to complete … more; the lump sum will be paid in …. As a case assumption, no leaving or death is assumed before payment, and the discount rate is …. Calculate the benefit attributed to services rendered under the plan formula, then its present value.CalculationL3
- To measure its obligation, Sorane SA attributes the plan benefit to periods of service by a simple pro rata of years, without reading the plan formula: this approach complies with IAS 19 (para. 70).True / falseL2
Actuarial assumptions3 questions
- The mortality of plan members is a financial actuarial assumption, just like the discount rate.True / falseL1
- Which assumptions are financial actuarial assumptions for the measurement of a defined benefit plan? More than one answer is possible.Multiple choiceL2
- To measure the obligation of a defined benefit plan of Rigel SA, the actuary presents four approaches for setting the actuarial assumptions (case facts). Which one is consistent with IAS 19?Single choiceL2
The discount rate3 questions
- The plan of Ismar SA must pay … in … to a cohort of members (benefit attributed to services rendered, case data). The entity has selected a discount rate of …, based on the market yield on high-quality corporate bonds at the reporting date (case data). An analyst simulates a rate of …. Calculate the present value at the initial rate, at the new rate, then the decrease in the cohort's obligation.CalculationL2
- A trainee justifies the discount rate selected for the obligation of a defined benefit plan of Mirel SA at the reporting date. Which of his justifications is wrong?Single choiceL2
- At the reporting date, the finance director of Nolane SA proposes to use for the pension obligation a rate of 5.2%, the yield on A-rated corporate bonds, on the grounds that they are more liquid. AA- and AAA-rated corporate bonds yield 4.3% at the reporting date. In its documented analysis, Nolane judges that only AA and AAA ratings meet the notion of high quality (entity judgement adopted for the case). Write a note that concludes on the rate to use, distinguishing rule, case facts, professional judgement and conclusion.JudgmentL2
Plan assets2 questions
- Securities that the employer holds directly, and that its creditors can seize in bankruptcy, are not plan assets, even if the employer has internally earmarked them to fund pensions.True / falseL1
- Ormel SA funds its pensions in two ways. A legally separate fund, which exists only to pay employee benefits, whose assets are beyond the reach of the entity's creditors and return to the employer only under limited conditions, holds 9,400,000 of investments. In addition, the entity directly holds 2,100,000 of securities that it has earmarked as an internal reserve for pensions, with no separate fund (case facts). What amount is deducted from the obligation as plan assets?Single choiceL2
The asset ceiling4 questions
- At 31 December, the plan of Pelvane SA shows an obligation of … (present value) and plan assets with a fair value of …. The present value of the economic benefits available as reductions in future contributions, discounted at the plan's discount rate, is …; Pelvane has an unconditional right to realise them (case data). Calculate the plan surplus, the net asset to recognise and the effect of the asset ceiling.CalculationL3
- At the reporting date, the plan of Tarvik SA shows a surplus of …, already recognised as a net asset before any adjustment. The present value of the economic benefits available (asset ceiling) is … (case data). Post the entry that brings the net asset down to the ceiling.Journal entryL3
- The plan of Belmar SA shows a surplus of 800,000. The plan rules give Belmar an unconditional right to obtain a refund of the surplus when the plan is settled, although that refund cannot be realised today. Management states that it has no intention of recovering the surplus (case facts). Which conclusion on the asset ceiling is correct?Single choiceL3
- A trainee summarises the treatment of the asset ceiling for a defined benefit plan in surplus. Which of his sentences is wrong?Single choiceL3
Minimum funding (IFRIC 14)2 questions
- The plan of Corlan SA is in surplus by …. Corlan has an unconditional right to a refund whose present value is …. For future services, the present value of future service costs under IAS 19 is … and that of the minimum funding contributions required for those same future services is …. Additional contributions of … (present value) cover an existing minimum funding shortfall in respect of services already rendered; once paid, they will remain available to Corlan as a refund (case data). Calculate the excess of the minimum funding contributions for future services over the future service cost, the benefit available as a reduction in future contributions (floor at zero) and the net asset to recognise.CalculationL4
- The plan of Devane SA is subject to a minimum funding requirement of 150,000 per year: 90,000 for future services, and 60,000 to clear an existing minimum funding shortfall in respect of services already rendered. The annual future service cost under IAS 19 is 100,000 (case data). Which conclusion on the benefit available as a reduction in future contributions is correct?Single choiceL3
Contributions from members or third parties1 question
The three components of cost3 questions
- The three components of defined benefit cost for a year (service cost, net interest and remeasurements) are recognised in profit or loss.True / falseL1
- For the year, the defined benefit plan of Aubrac SA shows a service cost of …, net interest of …, an actuarial loss on the obligation of … and a return on plan assets exceeding by … the interest income included in net interest. No plan event occurred. Calculate the cost to recognise in profit or loss and the net remeasurement loss to recognise in other comprehensive income.CalculationL2
- A trainee presents the accounting for the components of defined benefit cost for a year. Which of the trainee's sentences is wrong?Single choiceL2
The period's service cost2 questions
- For year N, the actuary of Hauvel SA attributes to services rendered during the year a benefit of …, payable in … to plan members (case data). The discount rate set at the start of the year was …; the rate at the reporting date is …. No plan amendment, curtailment or settlement occurred during the year. Calculate the service cost for the year.CalculationL2
- Rilmar SA closes its books on 31 December. No amendment, curtailment or settlement of its defined benefit plan occurred during year N. To calculate the service cost for year N, which actuarial assumptions should be used?Single choiceL2
Net interest3 questions
- At the start of the year, the defined benefit plan of Brenac SA shows an obligation of … and plan assets with a fair value of …. The discount rate set at the start of the year is … (case data). No contribution or benefit is paid during the year. Calculate the interest on the obligation, the interest income on plan assets (at the same rate) and net interest.CalculationL2
- A trainee calculates the net interest of a defined benefit plan for the year. Which of his steps is wrong?Single choiceL2
- The net defined benefit liability of Maurel SA was … at the start of the year. On 1 July, Maurel paid a contribution of … into the plan fund, which reduces the net liability; there is no other movement. As a case convention, the contribution is taken into account for the time remaining in the year, that is … of the year. The discount rate at the start of the year is …. Calculate the adjusted base of the net liability, then net interest for the year.CalculationL3
Remeasurements3 questions
- Which items are part of the remeasurements of the net defined benefit liability (asset)? More than one answer is possible.Multiple choiceL2
- The plan assets of Quirel SA had a fair value of … at the start of the year. The discount rate at the start of the year is … (case data). The actual return on assets for the year amounts to …. No contribution or benefit was paid during the year. Calculate the interest income included in net interest, then the remeasurement of plan assets to recognise in other comprehensive income.CalculationL3
- At the reporting date, the fall in the discount rate causes an actuarial loss of … on the obligation of the plan of Lorvel SA, partly offset by a return on assets exceeding by … the interest income included in net interest. The asset ceiling is not relevant. Post the entry for the net remeasurement of the net liability.Journal entryL3
Other comprehensive income without recycling2 questions
- Remeasurements of a defined benefit plan recognised in other comprehensive income are not reclassified to profit or loss in a later period, including when the plan is settled.True / falseL1
- Dorcel SA fully settles its defined benefit plan by transferring the obligations to an insurer. The cumulative remeasurements recognised so far in other comprehensive income are a loss of 1,240,000. The finance director proposes to reclassify that loss to profit or loss at the settlement date, so that the settlement result reflects the whole past of the plan (case facts). Write a short justification of the treatment of the cumulative remeasurements, distinguishing rule, case facts and conclusion.JudgmentL2
The obligation and assets reconciliation3 questions
- The defined benefit obligation of Garnel SA was … at the start of the year. For the year: service cost …; discount rate at the start of the year … (case data); benefits paid by the plan …. No amendment, curtailment or settlement. The actuary measures the closing obligation at …. Calculate the interest on the obligation, the expected closing obligation based on the movements, then the actuarial loss, obtained as a balancing figure.CalculationL3
- The fair value of the plan assets of Pelcor SA was … at the start of the year. During the year: discount rate at the start of the year … (case data); employer contributions …; benefits paid by the fund …. The closing fair value of the assets is …. Calculate the interest income on the assets, the expected closing fair value based on the movements, then the return on assets excluding interest income, obtained as a balancing figure.CalculationL3
- Navelle SA pays … in cash into the fund of its defined benefit plan, in accordance with its funding plan. Post the entry for the payment.Journal entryL3
Past service cost4 questions
- On 1 April, Evaris SA amends its defined benefit plan by improving the benefits. At the last reporting date, the obligation was 9,600,000. At 1 April, using current actuarial assumptions, the obligation is 9,910,000 before the amendment and 10,270,000 after the amendment (case facts). How does Evaris determine the past service cost?Single choiceL2
- On 1 July, Rovel SA improves the benefits of its defined benefit plan. After remeasuring the net liability at current assumptions, the past service cost is …. Post the entry for the past service cost.Journal entryL2
- On 1 April, Sablet SA amends its defined benefit plan. At the last reporting date, the obligation was …. At 1 April, after remeasuring the net liability using the fair value of assets and current actuarial assumptions, the obligation is … before the amendment and … after the amendment (case data). Calculate the past service cost.CalculationL2
- On 1 March N, Altair SA amends its defined benefit plan, which increases the obligation by 400,000 (past service cost, case data). This amendment is part of a restructuring whose related costs were recognised under IAS 37 as early as 15 January N (case facts). When does Altair recognise the past service cost as an expense?Single choiceL3
Plan curtailment2 questions
- A trainee describes the treatment of a plan curtailment that occurred during the year, following the elimination of many jobs. Which of his steps is wrong?Single choiceL3
- On 30 September, Ardane SA eliminates 180 jobs, which is a curtailment of its defined benefit plan. At the last reporting date, the obligation was 5,150,000 and the assets 4,700,000. On 30 September, before the curtailment, using current actuarial assumptions and fair value of assets, the obligation is 5,400,000 and the assets 4,650,000. The asset ceiling is not relevant (case facts). Write a short note that sets out the order of the steps and the starting values for determining the effect of the curtailment, distinguishing rule, case facts and conclusion.JudgmentL3
Plan settlement3 questions
- On 30 September, Tarnel SA settles the rights of a group of retirees by a payment of … taken from the fund. The corresponding obligation, remeasured at 30 September using current actuarial assumptions and before the settlement, is …; at the last reporting date it was …, using the assumptions of the time (case data). Calculate the settlement loss.CalculationL2
- Valdor SA settles the rights of a group of members for a price of …, whereas the corresponding obligation, remeasured at the settlement date using current assumptions, is …. As a case convention, the entry shows only the net effect on the net liability (the movements of the settled obligation and assets offset each other). Post the entry for the settlement loss.Journal entryL2
- Hydra SA transfers to an insurer all the obligations of a defined benefit plan, which it thereby settles definitively (case facts). At the settlement date, the present value of the obligation being settled, determined at that date, is 1,000,000; the settlement price comprises plan assets transferred of 850,000 and a direct payment by Hydra of 100,000 (case data). What is the gain or loss on settlement, and when is it recognised?Single choiceL2
Remeasurement before the plan event3 questions
- On 1 July, following a plan amendment, Zelmar SA remeasures its net defined benefit liability and obtains … after taking the event into account. The discount rate of the remeasurement is 4.4% a year; as six months of the year remain, the effective rate for the rest of the period is … (case convention: no contribution or benefit changes the net liability up to the reporting date). At the start of the year, the net liability was …, with a rate of 3.8% (case data). Calculate net interest for the second half-year.CalculationL3
- On 1 April, before measuring the past service cost of a plan amendment, Vernier SA remeasures its net liability using current assumptions and fair value. The remeasurement shows an increase in the net liability of …, due to the fall in the discount rate since the last reporting date. Post the entry for this prior remeasurement.Journal entryL3
- On 1 October, Sorel SA amends its defined benefit plan by reducing future benefits. The management controller proposes, "to avoid complications", to keep the opening assumptions for the service cost and net interest of the last quarter, and to measure the past service cost with the obligation at the last reporting date (case facts). Write a note that sets out the values and assumptions to use, what is a matter of professional judgement and the conclusion.JudgmentL3
Other long-term benefits2 questions
- Elvane SA has two commitments. The liability for its long-service bonus, paid after twenty years of service, suffers a remeasurement loss of 5,100. The liability of its defined benefit pension plan suffers a remeasurement loss of 12,000. Where are these two losses recognised?Single choiceL2
- The long-service bonus of Pavane SA is an other long-term benefit (case data). Its liability increases by … for service cost, … for interest and … for a remeasurement loss, with no payment in the year. Post the entry for the year.Journal entryL2
Termination benefits4 questions
- On 15 November, Solane SA offers its employees voluntary redundancy payments. Nothing prevents it from withdrawing the offer before an employee accepts it. One employee accepts on 10 December, another on 5 January. The year ends on 31 December and, at that date, Solane has recognised no IAS 37 restructuring costs that include termination payments (case facts). Which treatment is consistent at 31 December?Single choiceL2
- On 18 December, before the reporting date, employees of Dunar SA accepted a departure offer that Dunar can no longer withdraw. The termination payments, totalling …, will be settled in …, hence beyond twelve months after the reporting date. The discount rate adopted for the case is … (management's figure). Calculate the liability to recognise at 31 December.CalculationL2
- On 10 November, the board of Rivane SA approves the closure of a site and announces it to employees on 25 November. From 1 December, the voluntary redundancy offer is subject to a contractual restriction that prevents Rivane from withdrawing it. Employees can accept it until 15 January. Before 1 December, Rivane had recognised no IAS 37 restructuring costs that include termination payments. The reporting date is 31 December (case facts). Write a note that determines at what date and for what reason a termination benefit liability exists, highlighting what is a matter of professional judgement.JudgmentL2
- In N, Lyra SA recognises termination benefits under two schemes that are not an enhancement of post-employment benefits (case facts). The Nord scheme will be paid in full in March N+1; the Sud scheme will be paid in monthly instalments until December N+3. The financial year ends on 31 December (case facts). Under which requirements does IAS 19 measure these benefits?Single choiceL2