Name: ________________________________________ Score:____________
ID Number: ______________ Date:____________
Post Employment Benefits, Other Employee Benefits, Shareholders’ Equity
PROBLEM 1: Brook Company was organized at the beginning of a. What is the actual return on plan assets for the current
current year. The entity provided the following transactions affecting year?
shareholders' equity: b. What is the actuarial gain due to the decrease of PBO?
1. The entity was authorized to issue share capital as follows: c. What amount should be reported as employee benefit
Preference share capital, P100 par, 30,000 shares expense?
Ordinary share capital, P50 par value, 100,000 shares d. What is the net remeasurement gain or loss for the current
2. 40,000 ordinary shares of were issued for cash at P60 per year?
share.
3. 10,000 preference shares were issued at P120 for cash. PROBLEM 4: Vanessa Company had 35 employees who work
4. 10,000 preference shares were subscribed at par value. 8-hour days and are paid hourly.
5. P400,000 was received on the above subscription to preference On January 1, 2024, the entity began a program of granting the
shares. employees 10 days of paid vacation each year.
6. 1,000 preference shares were issued in payment of legal fees of Vacation days earned in 2024 may first be taken on January 1,
P100,000 in connection with organizing the corporation. 2024.
7. 20,000 ordinary shares were issued for property, plant and Year Hourly wage Vacation Vacation
equipment which had a fair value of P1,300,000. days earned days used by
8. 15,000 ordinary shares were subscribed for at par. by each each
9. Forty percent of the ordinary share capital subscription was employee employee
collected. 2024 129.00 10 0
10. The balance owing on the subscription described in 4 and 2025 135.00 10 8
5 was collected, and the preference shares were issued. 2026 142.50 10 10
11. The net income for the current year was P2,000,000.
The entity has chosen to accrue the liability for paid absences at
Requirement: Provide the journal entry for each transaction. the current rate of pay in effect when the compensated time is
earned.
PROBLEM 2: Toyota Company has two classes of share capital a. What amount should be reported as vacation pay
outstanding consisting of 12%, P100 par value preference share and expense?
P50 par value ordinary share. b. What amount of accrued liability for paid absences should
The entity reported the following balances at the beginning be reported on December 31, 2026?
of the current year:
Preference share capital - 5,000 shares500,000
Ordinary share capital - 50,000 shares 2,500,000
Share premium – PS 200,000
Share premium – ordinary 500,000
Retained earnings 2,000,000
The following data summarize the transactions for the current year:
Shares Per share
1. Issue of ordinary share capital 20,000 50
2. Purchase of treasury share – ordinary 5,000 60
3. Share split-ordinary 2 for 1
4. Reissue of treasury shares 3,000 40
5. Shareholders donated 15,000 ordinary shares to the corporation.
Subsequently, 10,000 donated shares were reissued at P40 per
share.
6. Net income for the year was P500,000.
7. Appropriated retained earnings equal to the cost of treasury
shares.
Requirement: Provide the journal entry for each transaction.
PROBLEM 3: Ultimate Company provided the following information
in relation to a defined benefit plan for the current year:
January 1 December 31
FVPA 2,600,000 3,000,000
PBO 2,000,000 2,100,000
Prepaid/accrued benefit cost - 600,000 900,000
surplus
Asset ceiling 200,000 300,000
Effect of asset ceiling 400,000 600,000
Current Service cost 100,000
Contribution to the plan 350,000
Benefits paid 150,000
Discount rate 10%
