Question

In: Accounting

The Royal Corp has a defined benefit pension plan. As of January 1, 2019, the company...

The Royal Corp has a defined benefit pension plan. As of January 1, 2019, the company had a Projected Benefit Obligation (PBO) of $80 million and Plan Assets of $75 million. The beginning balance of Prior Service Cost – AOCI is $2.5 million and the Net Gain – AOCI beginning balance is $1.2 million (2019 amortization: $.14 million).

The following data relates to the plan for the company’s current fiscal year, ended December 31, 2019.

$’s in millions Actual Return on Assets $6.2 Amortization of Prior Service Cost .7
Service Cost 3.2
Benefits Paid to Retirees 4.1 Contribution 3.8
Prior service cost amortization .7

Expected Rate of Return 7.0% Discount Rate 5.5%

REQUIRED: Complete the pension worksheet (provided in the Excel file) for the current fiscal year, 2019.

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, 2019                  2.5 Dr                    1.2 Cr               5.00 Cr                   80.00 Cr              75.00 Dr
Service cost                  3.2 Dr               3.20 Cr                     3.20 Cr
Interest cost                4.40 Dr               4.40 Cr                     4.40 Cr
PSC amortisation                     1 Dr                0.70 Cr
Return on plan assets                5.25 Cr                       1 Cr               6.20 Dr                6.20 Dr
OCI Gain amortisation                0.14 Cr                  0.14 Dr
New prior service cost Dr Dr Cr
Loss due to change in acturial assumptions Dr                          -   Cr
Contributions                3.80 Cr               3.80 Dr                3.80 Dr
Benefits paid                     4.10 Dr                4.10 Cr
Jounral for 2019                2.91 Dr                3.80 Cr                0.70 Cr                  0.81 Cr               2.40 Dr                     3.50 Cr                5.90 Dr
Opening balance Jan 1, 2019                2.50 Dr                  1.20 Cr               5.00 Cr                   80.00 Cr              75.00 Dr
Balance Dec 31, 2019                1.80 Dr                  2.01 Cr               2.60 Cr                   83.50 Cr              80.90 Dr

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

The Royal Corp has a defined benefit pension plan. As of January 1, 2019, the company...
The Royal Corp has a defined benefit pension plan. As of January 1, 2019, the company had a Projected Benefit Obligation (PBO) of $80 million and Plan Assets of $75 million. The beginning balance of Prior Service Cost – AOCI is $2.5 million and the Net Gain – AOCI beginning balance is $1.2 million (2019 amortization: $.14 million). The following data relates to the plan for the company’s current fiscal year, ended December 31, 2019. $’s in millions Actual Return...
On January 1, 2019, Parkway Company adopted a defined benefit pension plan. At that time, Parkway...
On January 1, 2019, Parkway Company adopted a defined benefit pension plan. At that time, Parkway awarded retroactive benefits to its employees, resulting in a prior service cost of $2,180,000 on that date (which it did not fund). Parkway decided to amortize this cost by the straight-line method over the 16-year average remaining service life of its active participating employees. Parkway’s actuary and funding agency have also provided the following additional information for 2019 and 2020: 2019 2020 Service cost...
On January 1, 2019, Baznik Company adopted a defined benefit pension plan. At that time, Baznik...
On January 1, 2019, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,200,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2019: Employee Expected Years of Future...
Blue Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2019, with...
Blue Company adopts acceptable accounting for its defined benefit pension plan on January 1, 2019, with the following beginning balances: plan assets $203,100; projected benefit obligation $252,000. Other data relating to 3 years’ operation of the plan are as follows. 2019 2020 2021 Annual service cost $15,800 $19,000 $26,200 Settlement rate and expected rate of return 10 % 10 % 10 % Actual return on plan assets 18,200 22,280 23,600 Annual funding (contributions) 15,800 39,400 47,600 Benefits paid 14,300 16,400...
On January 1, 2019, a company's defined benefit pension plan had a projected benefit obligation (PBO)...
On January 1, 2019, a company's defined benefit pension plan had a projected benefit obligation (PBO) of $380,000. The fair value of its pension plan assets on January 1 was $350,000. During 2019, the company contributed $50,000 to the pension plan and paid pension benefits to retirees in the amount of $70,000. The settlement rate for the pension plan for 2019 was 12%. Service cost for the year was estimated to be $109,000. The expected rate of return on pension...
Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the...
Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $489,900 Projected benefit obligation 616,700 Pension asset/liability 126,800 Accumulated OCI (PSC) 95,600 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,900 Settlement rate, 9% Actual return on plan assets 57,100 Amortization of prior service cost 19,500 Expected return on plan assets...
Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the...
Teal Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $489,900 Projected benefit obligation 616,700 Pension asset/liability 126,800 Accumulated OCI (PSC) 95,600 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,900 Settlement rate, 9% Actual return on plan assets 57,100 Amortization of prior service cost 19,500 Expected return on plan assets...
Flint Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the...
Flint Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $470,900 Projected benefit obligation 609,900 Pension asset/liability 139,000 Accumulated OCI (PSC) 99,800 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $93,800 Settlement rate, 10% Actual return on plan assets 54,500 Amortization of prior service cost 19,800 Expected return on plan assets...
Bridgeport Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the...
Bridgeport Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances related to this plan. Plan assets (market-related value) $536,000 Projected benefit obligation 652,000 Pension asset/liability 116,000 Cr. Prior service cost 86,000 Net gain or loss (debit) 99,000 As a result of the operation of the plan during 2020, the actuary provided the following additional data for 2020. Service cost $124,000 Settlement rate, 9%; expected return rate, 10% Actual return on plan assets...
Cullumber Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2021, the...
Cullumber Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2021, the following balances related to this plan. Plan assets (market-related value) $270,400 Projected benefit obligation 342,400 Pension asset/liability 72,000 Cr. Prior service cost 89,500 OCI—Loss 38,400 As a result of the operation of the plan during 2021, the actuary provided the following additional data for 2021. Service cost $44,200 Actual return on plan assets 27,600 Amortization of prior service cost 11,900 Contributions 64,400 Benefits paid...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT