Cima F2 Exam Question No 42

Question No 42:

Other entries affecting the pension assets and liabilities

• There are additional changes in the defined benefit asset/liability in the period affecting only the statement of financial position:
• Contributions (from the employer): Dr Pension asset Cr Bank
• Benefits paid: Dr Pension liability Cr Pension asset

Cima F2 Exam Question No 41

Question No 41:

What is effect on statement of comprehensive income for the period?

The changes in the defined benefit asset/liability in the period are treated as follows:
Current and past service costs: Dr P&L Cr Pension liability
Interest cost (on liability): Dr P&L (finance cost) Cr Pension liability
Interest income (on asset): Dr Pension asset Cr P&L (net off against finance cost)
Curtailments and settlements (if any): Dr or Cr P&L
Cr or Dr Pension liability
Remeasurement component gain/loss: Dr or Cr Other comprehensive income Cr or Dr Pension asset / liability

Cima F2 Exam Question No 40

Question No 40:

What is futures contracts?

Futures contracts oblige the holder to buy or sell a standard quantity of a specific underlying item at a specified future date. Futures contracts are very similar to forward contracts. The difference is that futures contracts have standard terms and are traded on a financial exchange, whereas forward contracts are tailor made and are not traded on a financial exchange.