Advanced AccountingMCQQuestion 5892 of 300
All Questions

Under AS 15, 'Employee Benefits', which actuarial valuation method is mandatory for measuring the present value of defined benefit obligations and the related current service cost?

Select Your Answer (Keyboard: A, B, C, D)
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option A — Projected Unit Credit Method (PUCM)

All Options:

  • AProjected Unit Credit Method (PUCM) ✓
  • BDiscounted Cash Flow Method (DCF)
  • CStraight Line Amortisation Method
  • DNet Present Value Annuity Method

Detailed Solution & Explanation

Measurement under AS 15 (Employee Benefits):
1. **Mandatory Actuarial Method**: Paragraph 64 of AS 15 prescribes the **Projected Unit Credit Method (PUCM)**.
2. **Concept**: The method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.
3. Discount rate used must be determined by reference to market yields at the balance sheet date on **government bonds**.
Hence, **Option A** is the correct answer.

More Questions from Advanced Accounting

What is the primary purpose of consolidated financial statements?

Which of the following methods is used to account for goodwill in consolidated financial statements?

What is the treatment of minority interest in consolidated financial statements?

Explain the concept of control in consolidated financial statements and its significance in determining the scope of consolidation.

Discuss the accounting treatment of inter-company transactions in consolidated financial statements.

What are the legal provisions governing the preparation of consolidated financial statements in your country? Explain the provisions of the Companies Act, 2013, regarding consolidated financial statements.

Ready to Master Advanced Accounting?

Practice all 300 questions with instant feedback, earn XP, track your streaks, and ace your CA Intermediate exam.

Start Practicing — It's Free