Question

In: Accounting

Answer questions 5-8 from the following information. Beginning PBO: $3,800,00 Contributions: $290,000 Beginning Plan Assets: $3,100,000...

Answer questions 5-8 from the following information.

Beginning PBO: $3,800,00

Contributions: $290,000

Beginning Plan Assets: $3,100,000

Benefits Paid: $410,000

Amendment-January 1: $450,000

Actual Return: $170,000

Service Cost: $180,000

Amortization PSC: $?

Discount Rate: 6%

Expected Rate of Return: 8%

Beginning PSC: $540,000

Actuarial Loss: $4,400

Beginning Net Gain: $470,000

Average Work Years: 18

5. Compute the ending balance of the projected benefit obligation (PBO).

6. Compute the ending balance of the plan assets.

7. Compute the ending balance of the unrecognized prior service cost (PSC).

8. Compute the ending balance of the unrecognized gain or loss.

Solutions

Expert Solution

Items Annual pension expense Cash AOCI-PSC OCI Gain Pension asset/liability Projected benefit obligation Plan assets
Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr Amount Dr/cr
Balance Jan 1, 2020         540,000 Dr           470,000 Cr        300,000 Dr            2,800,000 Cr      3,100,000 Dr
Service cost         180,000 Dr        180,000 Cr               180,000 Cr
Interest cost         168,000 Dr        168,000 Cr               168,000 Cr
PSC amortisation           30,000 Dr            30,000 Cr
Return on plan assets         248,000 Cr             78,000 Dr        170,000 Dr         170,000 Dr
OCI Gain amortisation              8,889 Cr                8,889 Dr
New prior service cost         450,000 Dr        450,000 Cr               450,000 Cr
Loss due to change in acturial assumptions                4,400 Dr                   4,400 Cr
Contributions         290,000 Cr        290,000 Dr         290,000 Dr
Benefits paid               410,000 Dr         410,000 Cr
Jounral for 2020         121,111 Dr         290,000 Cr         420,000 Dr             91,289 Dr        338,000 Cr               392,400 Cr            50,000 Dr
Opening balance Jan 1, 2020         540,000 Dr           470,000 Cr        300,000 Dr            2,800,000 Cr      3,100,000 Dr
Balance Dec 31, 2020         960,000 Dr           378,711 Cr           38,000 Cr            3,192,400 Cr      3,150,000 Dr

5. Ending balance of the projected benefit obligation (PBO) : $3,192,400

6. Ending balance of the plan assets: $3,150,000

7. Ending balance of the unrecognized prior service cost (PSC): $960,000

8. Ending balance of the unrecognized gain or loss: $378,711

Below is OCI gain amortization calculation for the year:

Corridor amortisation
Ref Particulars Amount
A Opening OCI gain/ loss $    470,000.00
Less: 10% of higher of plan assets or PBO
Opening balance:
Plan assets $ 3,100,000.00
PBO $ 2,800,000.00
B higher of above $ 3,100,000.00
C 10% of B $    310,000.00
D= A-C Amount subject to amortisation $    160,000.00
E Amortisation period $              18.00
F= D/E Amortisation amount $         8,888.89

PSC amortization for year = beginning balance/ service period = $540,000/18 = $30,000

Expected return on plan assets = $3,100,000 X 8% = $248,000

Interest cost = $2,800,000 X 6% = $168,000

Please rate.


Related Solutions

Answer questions 1-4 from the following information. Beginning PBO: $800,000 Contributions: $64,000 Beginning Plan Assets: $700,000...
Answer questions 1-4 from the following information. Beginning PBO: $800,000 Contributions: $64,000 Beginning Plan Assets: $700,000 Benefits Paid: $42,000 Amendment-January 1: $150,000 Actual Return: $9,000 Service Cost: $35,000 Amortization PSC: $11,000 Discount Rate: 4% Expected Rate of Return: 5% 1. Compute interest costs. 2. Compute the expected return. 3. Compute the ending balance of the plan assets. 4. Compute the ending balance of the unrecognized net gain or loss in AOCI.
Answer questions 1-4 from the following information. Beginning PBO: $600,000 Contributions: $47,000 Beginning Plan Assets: $550,000...
Answer questions 1-4 from the following information. Beginning PBO: $600,000 Contributions: $47,000 Beginning Plan Assets: $550,000 Benefits Paid: $33,000 Amendment-January 1: $170,000 Actual Return: $29,000 Service Cost: $52,000 Average Work Life: 17 years Discount Rate: 3% Expected Rate of Return: 6% Compute the ending balance of the projected benefit obligation (PBO). Compute the ending balance of the prior service cost in AOCI. Compute the ending balance of the plan assets. Compute the ending balance of the unrecognized net gain or...
A company with a DB pension plan had a beginning PBO of $280,000, beginning Plan Assets...
A company with a DB pension plan had a beginning PBO of $280,000, beginning Plan Assets of $252,000, and beginning Net Gain -- AOCI of $30,240. The average remaining service period of active employees is 10 years. Additional information for the current year: • Service cost of $37,800, plan contributions of $34,020, retiree benefits paid of $40,824 • Expected return of 8%, Actual return of 6% • Interest rate of 7.5%. 21. The corridor is ____. 22. Amortization of the...
Use the following information to answer the next 3 questions. ABC has beginning-of-year balances of: PBO,...
Use the following information to answer the next 3 questions. ABC has beginning-of-year balances of: PBO, $330,000; Plan Assets, $310,000; and Net Loss – AOCI, $55,000. During the year, ABC recorded a loss on Plan Assets of $8,820 and a gain on the PBO of $11,000. Net income for the year is $77,000. Assume no amortization of the net gain/loss in AOCI is needed. 14. Other comprehensive income is ____. 15. Comprehensive income is ____. 16. The end-of-year balance in...
Acturary and trustee reports indicate the following changes in the PBO and plan assets of White...
Acturary and trustee reports indicate the following changes in the PBO and plan assets of White Inc. during 2016: Prior service cost at January 1, 2016 from plan amendment at the beginning of 2013 [Amortization: $4,000 per year] $68,000 Net Gain - AOCI at January 1, 2016 $40,000 Average remaining service life of the active employee group 15 years Actuary's discount rate 5% Gain - from changes in actuarial assumptions $5,000 2016 Pension Expense $33,500 PBO Plan Assets Beginning of...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of White...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of White Inc. during 2016: Prior service cost at January 1, 206 from plan amendment at the beginning of 2013 [Amortization: $4,000 per year] $68,000 Net Gain - AOCI at January 1, 2016 $40,000 Average remaining service life of the active employee group 15 years Actuary's discount rate 5% Gain - from changes in actuarial assumptions $5,000 2016 Pension Expense $33,500 PBO Plan Assets Beginning of...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of White...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of White Inc. during 2017: Prior service cost at January 1, 2017 from plan amendment at the beginning of 2014 [Amortization: $4,000 per year] $68,000 Net Gain - AOCI at January 1, 2017 $40,000 Average remaining service life of the active employee group 15 years Actuary's discount rate 5% Gain - from changes in actuarial assumptions $5,000 2017 Pension Expense $33,500 PBO Plan Assets Beginning of...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of White...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of White Inc. during 2016: Prior service cost at January 1, 2016 from plan amendment at the beginning of 2013 [Amortization: $4,000 per year] $68,000 Net Gain - AOCI at January 1, 2016 $40,000 Average remaining service life of the active employee group 15 years Actuary's discount rate 5% Gain - from changes in actuarial assumptions $5,000 2016 Pension Expense $33,500 PBO Plan Assets Beginning of...
Please answer the question which number 5 to 8 [The following information applies to the questions...
Please answer the question which number 5 to 8 [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its unit costs for each product at this level of activity are given below: Alpha Beta   Direct materials $...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts...
Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2018: Prior service cost at Jan. 1, 2018, from plan amendment at the beginning of 2015 (amortization: $4 million per year) $ 12 million Net loss—AOCI at Jan.1, 2018 (previous losses exceeded previous gains) $ 98 million Average remaining service life of the active employee group 10 years Actuary's discount rate 3 % ($ in millions) Plan PBO Assets Beginning of 2018...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT