Page 269 - Group Insurance and Retirement Benefit IC 83 E- Book

218 AS 15

Illustration I

Illustration

This illustration is illustrative only and does not form partofthe Standard.
The purpose of this illustration is to illustrate the application of the
Standard to assist in clarifying its meaning. Extracts from statements of
profit and loss and balance sheets are provided to show the effects of
the transactions described below. These extracts do not necessarily
conform with all the disclosure and presentation requirements of other
Accounting Standards.

Background Information

The following information is given about a funded defined benefit plan. To
keep interest computations simple, all transactions are assumed to occur
at the year end. The present value of the obligation and the fair value of
the plan assets were both Rs. 1,000 at 1 April, 20X4.

(Amount in Rs.)
20X4-X5 20X5-X6 20X6-X7

Discount rate at start of year 10.0% 9.0% 8.0%

Expected rate of return on plan assets
at start of year 12.0% 11.1% 10.3%
Current service cost 130 140 150
Benefits paid 150 180 190

Contributions paid 90 100 110

Present value of obligation at 31 March 1,141 1,197 1,295

Fair value of plan assets at 31 March 1,092 1,109 1,093

Expected average remaining working
lives of employees (years) 10 10 10

In 20X5-X6, the plan was amended to provide additional benefits with
effect from 1 April 20X5. The present value as at 1 April 20X5 of
additional benefits for employee service before 1 April 20X5 was Rs. 50
for vested benefits and Rs. 30 for non-vested benefits. As at 1 April
20X5, the enterprise estimated that the average period until the non-