Background:. Assume that you are managers in the audit
Added on - Sep 2019
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Background:Assume that you are managers in the audit section of an accounting firm. One of the firm’sclients, Adelaide Ltd, operates in the retail sector, with over 100,000 employees. AdelaideLtd sponsors a defined benefit superannuation plan, the Adelaide Group Superannuation Plan(AGSP) which provides superannuation benefits for qualifying employees on retirement. Youhave been asked to provide guidance to the client on how to write the note to the financialstatements that provides all of the relevant disclosures in accordance with AASB 119Employee Benefits for the Plan.Data:Adelaide Ltd contributes to the AGSP on behalf of its employees.Details of the AGSPfor the year ended 30 June 2016 are:At 1 July 2015 the:Fair value of the plan assets were $11,182,400Present value of the defined benefit obligation was $11,501,700Discount rate was 5%At 30 June 2016 the:Fair value of the plan assets were $11,012,800Present value of the defined benefit obligation was $11,487,500Discount rate was 7%During the year ended 30 June 2016 the:Rate of return on plan assets was 6%Benefits paid were $1,900,800Contributions received $1,604,000Current service cost $1,344,000Additional information:In July 2015 the AGSP was amended to increase superannuation benefits foremployees for each year of service, starting on 1 July 2011. The present value of theadditional superannuation benefits for service from 1 July 2011 to 1 July 2015 is$818,000.Extract from the Notes to the Financial Statements from a model set of financialstatements.