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CA Intermediate · Advanced Accounting · AS 15 Employee Benefits

Rohini Pharma Ltd. has a defined benefit plan. At 31 March 2026, the present value of the defined benefit obligation is Rs 90,00,000, the fair value of plan assets is Rs 70,00,000, unrecognised past service cost is Rs 5,00,000 and there are no unrecognised actuarial gains or losses (these are recognised immediately). Another plan of the company shows plan assets exceeding obligations: obligation Rs 20,00,000, assets Rs 26,00,000, with the present value of available refunds and reduced future contributions being Rs 4,00,000 and no unrecognised items. What amounts appear in the balance sheet for the first plan as a liability and for the second plan as an asset?

The first plan shows a liability of Rs 15,00,000 (Rs 90,00,000 obligation less Rs 70,00,000 assets less Rs 5,00,000 unrecognised past service cost), and the second shows an asset of Rs 4,00,000, because the Rs 6,00,000 surplus is capped at the present value of available economic benefits.

  1. ALiability Rs 20,00,000 ; asset Rs 6,00,000
  2. BLiability Rs 15,00,000 ; asset Rs 4,00,000Correct
  3. CLiability Rs 15,00,000 ; asset Rs 6,00,000
  4. DLiability Rs 25,00,000 ; asset Rs 4,00,000

Explanation

First plan: liability = obligation 90,00,000 - assets 70,00,000 - unrecognised past service cost 5,00,000 = Rs 15,00,000. Second plan: surplus is 6,00,000 but the asset is limited to the present value of available economic benefits, Rs 4,00,000. Rs 6,00,000 ignores the asset ceiling; Rs 20,00,000 forgets to deduct unrecognised past service cost.

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