Question

In: Accounting

The following information relates to the pension plan for the employees of Turner Co.:                            &nbsp

The following information relates to the pension plan for the employees of Turner Co.:

                                                                                 1/1/14       12/31/14     12/31/15

Accum. benefit obligation   

                                              $6,160,000                                     $6,440,000               $8,400,000

Projected benefit obligation                                                                         

                                           6,510,000                                             6,972,000                  9,338,000

Fair value of plan assets                                                                                

                                           5,950,000                                             7,280,000                  8,036,000

AOCI – net (gain) or loss                                                                          

                                                 -0-                                           (1,085,000)                       (1,120,000)

Settlement rate (for year)                                                                                          

                                                           10%                                                    9%

Expected rate of return (for year)                                                                                               

                                                            8%                                                     7%

Turner estimates that the average remaining service life is 20 years. Turner's contribution was $882,000 in 2015 and benefits paid were $602,000.

The interest cost for 2015 is

a.   $627,480.

b.   $708,400.

c.   $766,920.

d.   $1,027,180.

The actual return on plan assets in 2015 is

a.   $476,000.

b.   $532,000.

c.   $686,000.

d.   $756,000.

The unexpected gain or loss on plan assets in 2015 is

a.   $33,600 loss.

b.   $26,320 gain.

c.   $32,400 gain.

d.   $50,320 loss.

The corridor for 2015 is

a.   $697,200.

b.   $833,800.

c.   $891,000.

d.   $728,000.

The amount of AOCI (net gain) amortized in 2015 is

a.   $17,850.

b.   $17,500.

c.   $13,563.

d.   $11,638.

Solutions

Expert Solution

b. Correct Answer is (a) $476000
b. Computation of Actual Return on Plan Asset
Plan assets (at fair value)  12/31/15 8036000
Less: Plan assets (at fair value)  12/31/14 7280000
Total A 756000
contribution in 2015 -882000
Benefits paid 602000
Total B -280000
The actual return on plan assets in 2015 476000
c. Correct Answer is (a) $33600 Loss
b. Computation of Unexpected Gain on plan Asset
Actual return on plan assets in 2015 was
(a)		 476000
Plan assets (at fair value)  12/31/14 7280000
0.07
(7280,000 X .07) (b) 509600
The unexpected Loss on plan assets in 2015 was (a-b) -33600
d. Correct Answer is (d) $728000
The Corridor for 2015 = Fair value of plan assets in 2014 * 10%
The Corridor for 2015 =$7280000*10%
The Corridor for 2015 = $728000
e. The amount of AOCI amortised in 2015 is ($1085000 – $728,000) ÷ 20 = $17,850
Correct Answer is (a) $17850

ekkarill92 answered 2 years ago
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