Question

In: Accounting

ABC Corp. provides its employees with a defined benefit pension plan. The company's actuary has provided...

ABC Corp. provides its employees with a defined benefit pension plan. The company's actuary has provided you with the following information as of December 31, 2020: PBO $ 1,200,000 Fair Value Plan Assets 1,650,000 Current Service Cost 480,000 Interest Cost 48,000 PSC amortization 120,000 Expected and actual return on assets 165,000 In the past, contributions made to the pension plan have been equal to the pension expense for the corresponding year. The company has not made any contribution in 2020. In the statement of financial position as of December 31, 2020, ABC must report

a. a net pension asset of $ 1,650,000

b. a net pension debt of $ 78,000

c. a net pension debt of $ 450,000

d. a net pension asset of $ 450,000

Solutions

Expert Solution

December 31,2020
PBO $ 1,200,000
Fair Value plan assets $ 1,650,000
Net Pension asset $ 450,000 (1,650,000 - 1,200,000 )
Correct answer is option d.

Related Solutions

Cullumber Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided...
Cullumber Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan. January 1, December 31, 2020 2020 2021 Projected benefit obligation $2,780,000 $3,622,200 $4,163,976 Accumulated benefit obligation 1,900,000 2,441,000 2,904,000 Plan assets (fair value and market-related asset value) 1,700,000 2,896,000 3,753,000 Accumulated net (gain) or loss (for purposes of the corridor calculation) 0 196,000 (24,000 ) Discount rate (current settlement rate) 9 % 8 % Actual and expected asset...
Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided...
Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan. January 1, December 31, 2017 2017 2018 Projected benefit obligation $2,800,000 $3,650,000 $4,195,000 Accumulated benefit obligation 1,900,000 2,430,000 2,900,000 Plan assets (fair value and market-related asset value) 1,700,000 2,900,000 3,790,000 Accumulated net (gain) or loss (for purposes of the corridor calculation) 0 198,000 (24,000 ) Discount rate (current settlement rate) 9 % 8 % Actual and expected asset...
ABC, Inc. provides its employees with a defined benefit pension plan. In 2020, the company made...
ABC, Inc. provides its employees with a defined benefit pension plan. In 2020, the company made the mistake of not amortizing the cost of prior period services (PSC). Which of the following statements is correct? a. Total equity is underestimated. b. The company's net income is overstated. c. Total debt is overstated. d. The company's net income is underestimated.
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....
Pen Fen Corp has a defined benefit pension expense plan for its employees. In the year...
Pen Fen Corp has a defined benefit pension expense plan for its employees. In the year ended Dec 31, 2019, Pen Fen gathered the following information ( the company uses ASPE) Contributions ......................................................... $500,000 Expected & Actual Return on Plan Assets ....... 10% Interest rate on Obligations ................................ 12% Service costs relating to past services ............. $100,000 Actuarial Loss ....................................................... $40,000 Current Service costs .......................................... $630,000 DBO – Jan 1 ,2019................................................ $720,000 FV Plan Assets – Jan 1 , 2019...............................
Duntroon Corp. has had a defined benefit pension plan for its employees for the last 20...
Duntroon Corp. has had a defined benefit pension plan for its employees for the last 20 years. Relevant information for Duntroon’s December 31, 20X5, fiscal year follows: 1. As at December 31, 20X4, the balance in the defined benefit obligation was $980,000 and the plan assets was $720,000. 2. On January 1, 20X5, there was a past service adjustment that improved the benefits under the plan. The actuary determined the amount of this adjustment to be $90,000. 3. The current...
Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining...
Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 2016 and 2017 related to the pension plan: 2018 2017 Projected benefit obligation, 1/1 ? $ 750,000 Service cost $ 70,000 60,000 Actual return on plan assets 66,400 72,000 Bonny Corp. contributions for year ended 12/31 74,000 68,000 Benefits paid during year 67,000 60,000 Fair value of plan assets, 1/1 ? 600,000 Actuarial...
AOG Inc. provides a defined benefit plan for its employees, and reports using ASPE. The pension...
AOG Inc. provides a defined benefit plan for its employees, and reports using ASPE. The pension plan administrator for AOG Inc. provided the following information for the year ended December 31, 2020          Fair value of plan assets, January 1..................................           820,000          Defined benefit obligation, January 1..............................            760,000          Current service cost.........................................................           60,000          Employer contributions..................................................             85,000          Benefits paid to retirees...................................................           50,000           Actuarial Gain………………………………………………….            25,000          Actual return...................................................................                 5%          Interest (discount) rate....................................................                  6% Required: a.) What is the fair value of the plan assets at December 31,...
Ivanhoe Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about...
Ivanhoe Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, 2017 December 31, 2017 Vested benefit obligation $1,500 $1,940 Accumulated benefit obligation 1,940 2,780 Projected benefit obligation 2,480 3,350 Plan assets (fair value) 1,670 2,650 Settlement rate and expected rate of return 10% Pension asset/liability 810 ? Service cost for the year 2017 390 Contributions (funding in 2017) 690 Benefits paid in 2017 200 Prepare the journal entries at December...
Culver Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about...
Culver Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, 2017 December 31, 2017 Vested benefit obligation $1,650 $1,750 Accumulated benefit obligation 1,750 2,750 Projected benefit obligation 2,250 3,560 Plan assets (fair value) 1,730 2,640 Settlement rate and expected rate of return 10 % Pension asset/liability 520 ? Service cost for the year 2017 440 Contributions (funding in 2017) 750 Benefits paid in 2017 210 (a) Compute the actual return...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT