Beehive limited has a defined benefit plan that pays retirement benefits to all participating employees. Beehive limited contributes to the fund. Employee benefits paid are determined using a formula that incorporates the number of years employed and the salary level of the members upon retirement Details of the fund are as follows N$ Fair value of plan asset at 1St January 2016 6 000 000 Fair value of plan asset at 31St December 2016 6 500 000 Present value of plan obligation at 1St January 2016 6 900 000 Present value of plan obligation at 31St December 2016 7 700 000 Actual return on plan asset 700 000 Current year’s service costs 1 000 000 Payments made to the fund by company 900 000 Benefits paid by fund 1 100 000 Past service cost 150 000 Rate on long —term high quality corporate bonds 10% Required: (a) Calculate the employee benefit expense to be recognised in profit or loss (5 marks) (b) Calculate the re-measurement of the net defined liability /asset to be recognised in other comprehensive income (4 marks) (0) Prepare the journal entries for the defined benefit plan for the year ended 31 December 2016. (16 marks)
