CA Inter P1 · Chapter 4 · Question 4 of 8
Case: For the defined benefit plan of Lotus Pharma Ltd: opening present value of obligation ₹20,00,000; current service cost ₹2,50,000; interest cost at 8% on the opening obligation; benefits paid at year end ₹1,20,000; closing present value of obligation as per actuary ₹24,00,000. The actuarial loss on the obligation for the year is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹1,10,000
Explanation
Expected closing obligation = Opening 20,00,000 + Current service cost 2,50,000 + Interest cost (20,00,000 x 8% = 1,60,000) - Benefits paid 1,20,000 = 22,90,000. Actual closing obligation is 24,00,000, so actuarial loss = 24,00,000 - 22,90,000 = ₹1,10,000.
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