Module 18: Employee Benefits

Question 1

Defined contribution plans

Answer 1

Contributions are fixed but benefits paid out are variable

Question 2

Defined contribution pension - expense journal

Answer 2

DR SPL - staff costs
CR HMRC Liability
CR Pension liability
CR Bank

Question 3

Defined contribution pension - liability double entry

Answer 3

DR HMRC liability
DR Pension liability
CR Bank

Question 4

Defined benefit

Answer 4

Annual benefit paid to a pensioner is fixed but the contributions are variable. Exact amount of benefit is not known until retirement

Question 5

Defined benefit step 1

Answer 5

Contributions

Question 6

Step 1 double entry

Answer 6

DR Pension account (asset)

CR Bank

Question 7

Defined benefit step 2

Answer 7

Benefit payments to pensioners

Question 8

Step 2 double entry

Answer 8

DR Pension account (obligation)

CR Pension account (assets)

Question 9

Defined benefit step 3

Answer 9

Service cost

Question 10

Step 3 journal

Answer 10

DR SPL - staff costs

CR Pension account (obligation)

Question 11

Additional contributions to service cost double entry

Answer 11

DR Pension account (assets)

CR Bank

Question 12

Defined benefit pension step 4

Answer 12

Interest

Question 13

Step 4 double entry

Answer 13

DR Pension account (asset)
CR Pension account (obligation)
CR SPL - finance income

Question 14

Defined benefit pension step 5

Answer 14

Remeasurement

Question 15

Step 5 double entry

Answer 15

DR Pension account (assets)
CR Pension account (obligations)
CR Retained earnings