Question
In: Accounting
PBO estimate declined by 40 million Expected return on plan assets = 50 million Actual return...
PBO estimate declined by 40 million
Expected return on plan assets = 50 million
Actual return on plan assets = 20 million
What is the net increase in AOCI? (A net loss was reported AOCI in the previous year's balance sheet)
Solutions
Expert Solution
Pension gains and losses (either from changing assumptions regarding the PBO or the return on assets being higher or lower than expected) are deferred and not immediately included in pension expense and net income. They are, however, reported as other comprehensive income in the period they occur.
1. PBO estimate declined by 40 million- The 40 million is considered a gain and is reported in the statement of comprehensive income rather than being reported in P/L.It then becomes part of accumulated other comprehensive income in the balance sheet a part of net gain–AOCI.
2.(loss from actual return falling short of expected) i.e. 30million as a gain in AOCI.
The Net loss—AOCI in the balance sheet increases by the current 30 million Loss—OCI and decreases by the current 40 million Gain—OCI, a net reduction of 10 million.
($ in millions)
Plus: Loss—OCI 30
Less: Gain—OCI (40)
Decrease in Net loss—AOCI (10)
ekkarill92 answered 1 year agoRelated Solutions
To convert actual to expected return on plan assets, what's the Worksheet adjustment needed in calculating...
To convert actual to expected return on plan assets, what's
the Worksheet adjustment needed in calculating 2019 Pension Expense
for Fox Co. based on the following info?
Pension data for the 2019 calendar year:Service cost$ 70,000
Actual return on plan assets 9%
Benefits to retirees 60,000 Expected return on plan assets
7%
Cash contributions 50,000 Settlement rate 6%
Fox's Beginning 2019 Info (December 31, 2018 balances):Plan
Assets$ 700,000
Projected Benefit Obligation (PBO) 850,000
Accumulated net other comprehensive loss (average service...
You are provided the following information: Actual return on plan assets 3% Average tenure of plan...
You are provided the following information:
Actual return on plan assets
3%
Average tenure of plan participants
20
Benefits paid
308
Contributions
500
Discount rate
4%
Expected return on plan assets
5%
OCI Gain amortization 2
600
Plan assets 1/1
4,200
Prior service cost
40
Projected benefit obligation
5,600
Service cost
680
Perform the calculation for each of the following:
(15) Projected benefit obligation 12/31
(15) Plan assets 12/31
(15) Pension expense
(5) The gain or loss to be recognized...
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...
How do we account for Actual Return(s) on Plan Assets? How does the respective return affect...
How do we account for Actual Return(s) on Plan Assets? How does
the respective return affect the Pension Liability?
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...
What situation could lead to a bigger difference in the expected return on plan assets vs....
What situation could lead to a bigger difference in the expected
return on plan assets vs. the actual return on plan assets - in any
given year?
a. Young workforce, employees far from retirement
b. Assets invested in a blind trust
c. IFRS-reporting company
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
Latest Questions
- Suppose a company is looking to hedge a risk in the derivatives market. What, fundamentally, is...
- Training and Development assignment. Describe the usage of Computer Based Training (CBT) in McDonald's Company training...
- PUT IN JAVA PROGRAMMING LANGUAGE The Rectangle class: Design a class named Rectangle to represent a...
- Journal article summary on inter-group conflict Peer Reviewed Journal article from past 3 years. Please include...
- "Ethical Considerations" Please respond to the following: Reflect upon the responsibilities placed on auditors by the...
- A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par...
- What is the difference among the principles of modularization, abstraction, encapsulation, and separation of interface and...
ADVERTISEMENT