Question

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

Answer 1

Plan Assets
Year 4	Opening balance	$                       -	Year 4
	Contribution to Plan Asset	$      395,000.00		Benefit paid
	Expected Return	$        40,000.00		Closing balance	$      435,000.00
Year 4		$      435,000.00	Year 4		$      435,000.00
Projected Benefit Obligation
Year 4			Year 4	Opening balance	$      820,000.00
				Service Cost	$      290,000.00
				Interest cost	$        75,000.00
				Prior Service cost	$        80,000.00
	Closing balance	$ 1,265,000.00
Year 4		$ 1,265,000.00	Year 4		$ 1,265,000.00
	Closing PBO	$ 1,265,000.00
	Closing Plan asset	$      435,000.00
	Net pension fund asset/(liability)	$   (830,000.00)
	Beck's ending underfunded status for its Pension Plan in Year 4 is $8,30,000
	*Amortisation of net loss and Prior service cost shall not be part of pension plan and to be expensed off.

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