Question
In: Accounting
A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit...
A partially completed pension spreadsheet showing the
relationships among the elements that comprise the defined benefit
pension plan of Universal Products is given below. The actuary's
discount rate is 5%. At the end of 2016, the pension formula was
amended, creating a prior service cost of $180,000. The expected
rate of return on assets was 8%, and the average remaining service
life of the active employee group is 20 years in the current year
as well as the previous two years.
Required:
Fill in the missing amounts. (Enter credit amounts with a
minus sign and debit amounts with a positive
sign.)
|
Solutions
Expert Solution
| Answer: | |||||||||
| Prior | Net Pension | ||||||||
| Plan | Service | Net Loss | Pension | (Liability) | |||||
| ($ in 000s) | PBO | Assets | Cost – AOCI | – AOCI | Expense | Cash | / Asset | ||
| Balance, Jan. 1, 2018 | ($620) | $480 | $171 | $62 | ($140) | ||||
| Service cost | -94 | 94 | -94 | (0-94) | |||||
| Interest cost, 5% | -31 | 31 | -31 | (0-31) | |||||
| Expected return on assets | 39 | -39 | 39 | (39-0) | |||||
| Adjust for: | 0 | ||||||||
| Loss on assets | -11 | 11 | -11 | (0-11) | |||||
| Amortization: | 0 | ||||||||
| Prior service cost | -9 | 9 | 0 | ||||||
| Amortization: | 0 | ||||||||
| Net loss | 0 | ||||||||
| Gain on PBO | 18 | 18 | (18-0) | ||||||
| Prior service cost | 0 | ||||||||
| Cash funding | 78 | -78 | 78 | (78-0) | |||||
| Retiree benefits | 50 | -50 | 0 | ||||||
| Balance, Dec. 31, 2018 | ($677) | $536 | $162 | $73 | $95 | ($141) | |||
| Note: | |||||||||
| 1 | Retiree benefit | =(-620-94-31+18)-(-677) | $ (50) | ||||||
| 2 | Prior Service Cost Amortization | =$171-162 | $ 9 | ||||||
| 3 | Pension Expense | =94+31-39+9 | $ 95 | ||||||
| 4 | Plan Asset -Balance, Dec 31, 2018 | =$480+39-11+78-50 | $ 536 | ||||||
| 5 | Net pension asset/liabilities | =-140-94-31+39-11+18+78 | $ (141) |
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