Entity a Contributes to a Defined Benefit Superannuation Plan for Its

question 50

Multiple Choice

Entity A contributes to a defined benefit superannuation plan for its employees.It calculates the following:
$$\begin{array} { | l | l | } \hline \text { Present value of the obligation } & 12286 \\\hline \text { Fair value of plan assets } & \underline {11500} \\\hline & \underline { 786 } \\\hline\end{array}$$
The $786 represents:

• A) the expense to be recognised in the statement of comprehensive income.
• B) the asset to be recognised in the statement of financial position.
• C) the liability to be recognised in the statement of financial position.
• D) the revenue to be recognised in the statement of comprehensive income.

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Definitions:

Net Operating Income

The income generated by a company's activities, after deducting the costs of operations from the revenue obtained.

Variable Costing

A bookkeeping approach that incorporates solely the variable costs of production (such as direct materials, direct labor, and variable manufacturing overhead) into the cost of goods sold while omitting fixed manufacturing overhead.

Contribution Format

A method of organizing the income statement where variable expenses are deducted from sales to show the contribution margin, highlighting the variable costs and fixed costs separately.

Income Statement

A financial document that provides an overview of a company's performance over a specific period, detailing revenues, expenses, and net earnings.