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 3 years ago
Next > < Previous

Related Solutions

Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees....
Turner Inc. provides a defined benefit pension plan to its employees. The company has 150 employees. The remaining amortization period at December 31, 2016, for prior service cost is 5 years. The average remaining service life of employees is 11 years at January 1, 2017, and 10 years at December 31, 2017. The AOCI—net actuarial (gain) loss was zero at December 31, 2016. Turner smooths recognition of its gains and losses when computing its market-related value to compute expected return....
The following information relates to Beck Co.'s defined benefit pension plan during Year 4: Beginning funded...
The following information relates to Beck Co.'s defined benefit pension plan during Year 4: Beginning funded status: $820,000 liability Contributions: 395,000 Service cost: 290,000 Interest cost: 75,000 Expected return on plan assets: 40,000 Prior service cost associated with Year 4 amendment: 80,000 Amortization of net loss incurred in Year 3: 5,000 Amortization of prior service cost from Year 2 plan amendments: 10,000 What is Beck's ending underfunded status for its pension plan in Year 4
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a single employee is covered by the plan. That employee has worked for Kraemerica since 1-1-2014 and she has earned pension benefits since 1-1-2014. Additional informa­tion is provided below.                   1)   Benefit formula: Upon retirement and upon reaching age 65, the employee will receive a pension payment annually (payments to be made as long as employee lives).                          The first check will be issued one...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a...
The following information relates to the defined benefit pension plan of the Kraemerica Company. Only a single employee is covered by the plan. That employee has worked for Kraemerica since 1-1-2014 and she has earned pension benefits since 1-1-2014. Additional informa­tion is provided below.                   1)   Benefit formula: Upon retirement and upon reaching age 65, the employee will receive a pension payment annually (payments to be made as long as employee lives).                          The first check will be issued one...
The following information is for the pension plan for the employees of Sheridan, Inc. 12/31/20 12/31/21...
The following information is for the pension plan for the employees of Sheridan, Inc. 12/31/20 12/31/21 Accumulated benefit obligation $2,760,000 $3,720,000 Projected benefit obligation 3,060,000 3,960,000 Fair value of plan assets 3,090,000 3,590,000 AOCI - Net (gain) or loss (385,000) (440,000) Settlement rate 7% 7% Expected rate of return 6% 5% Sheridan estimates that the average remaining service life is 15 years. Sheridan's contribution was $488,000 in 2021 and benefits paid were $240,000. Calculate the interest cost for 2021. Interest...
Kamphor Co. received the following information from its pension plan trustee concerning the operation of the...
Kamphor Co. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2021:                                                                                      January 1, 2021    December 31, 2021          Projected benefit obligation                                  $2,500,000                $2,755,000          Fair value of plan assets                                         1,250,000                  1,750,000          Accumulated OCI – (PSC)                                     540,000                    300,000 Service cost for 2021 is $180,000 and amortization of prior service cost is $240,000. The company's funding contribution to the plan in 2021 amounted to $525,000....
BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the...
BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the following balances relate to this plan. GHS Plan assets 480,000 Defined benefit obligation 625,000 Pension asset/liability 45,000 Unrecognized past service cost 100,000 As a result of the operation of the plan during 2010, the following additional data are provided by the actuary. Service cost for 2010 90,000 Discount rate, 9% Actual return on plan assets in 2010 57,000 Amortization of past service cost 19,000...
BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the...
BEST CO sponsors a defined benefit pension plan for its employees. On January 1, 2010, the following balances relate to this plan. GHS Plan assets 480,000 Defined benefit obligation 625,000 Pension asset/liability 45,000 Unrecognized past service cost 100,000 As a result of the operation of the plan during 2010, the following additional data are provided by the actuary. Service cost for 2010 is 90,000 Discount rate, 9% Actual return on plan assets in 2010 is 57,000 Amortization of past service...
Thorp Inc. maintains a defined benefit pension plan for its employees. Pension plan balances as at...
Thorp Inc. maintains a defined benefit pension plan for its employees. Pension plan balances as at January 1, 2020 include: Projected Benefit Obligation (PBO), January 1, 2020 $ 600,000 Plan assets at market-related value, January 1, 2020 $ 550,000 Prior service cost (PSC- OCI)1 $ 150,000 Average remaining service period 15 years Service cost $ 90,000 Expected returns on plan assets 8% Actual returns earned on plan assets $40,000 Actuarial interest rate 4% Contributions paid $ 150,000 Benefits to retirees...
Thorp Inc. maintains a defined benefit pension plan for its employees. Pension plan balances as at...
Thorp Inc. maintains a defined benefit pension plan for its employees. Pension plan balances as at January 1, 2020 include:     Projected Benefit Obligation (PBO), January 1, 2020 $ 600,000     Plan assets at market-related value, January 1, 2020   $ 550,000     Prior service cost (PSC- OCI)1 $ 150,000 Average remaining service period 15 years    Service cost $ 90,000    Expected returns on plan assets   8% Actual returns earned on plan assets    $40,000 Actuarial interest rate   4%    Contributions paid $ 150,000 Benefits to retirees...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT