interoffice memorandum
.docx
keyboard_arrow_up
School
Alabama A&M University *
*We aren’t endorsed by this school
Course
ACC-450
Subject
Accounting
Date
Feb 20, 2024
Type
docx
Pages
3
Uploaded by KidTigerPerson17
INTEROFFICE MEMORANDUM
TO:
ADMINISTRATORS OF THE STATE PENSION
FROM:
MADDOX & MUSSON LLC
SUBJECT:
TEACHER PENSION FUND ANALYSIS
DATE:
4/29/2019
CC:
PROFESSOR ROACH
We were presented with a case that focused on an underfunded teacher pension fund throughout the course of 30 years (2016-2046). Throughout each different case, we were focused on each case with different scenarios to determine how good or bad each outcome was over 30 years. In order to accomplish this task, we were given different inputs and other components to calculate the teacher pension. In order to concise our analysis, we performed a what-if analysis to provide a summary of each case’s outcome to validate our findings.
Base Case
With the base case, the overall goal, we found, was to marginally decrease the unfunded liability annually. With all three of the other cases, the NPV reaches the negative before the ten-year mark. In this case, the Net Present Value doesn’t do so until the fifteenth year. However, the administrators are using 80% as their goal number, with regards to the asset to liability ratio and they reach it within eight fiscal periods. This is arguably the
worst case due to the fact that their eventual dive into the negatives, with reference to the unfunded liability NPV, was far less expedient than the percentage climb of their assets to liability ratio.
Worst Case
Based on our what-if analysis we found that the Net Present Value of the unfunded liability increased steadily, landing at $ 35,235,263,365 in year 15, while the assets to liability ratio NPV moved continually in the opposite direction, dropping by a total of 12% within the first 15 years. Although the “worst case” trend-line is the only one characterized by continuous declension, when viewed through an equity lens, it marks positive movement due to the fact that a ratio under 50% denotes financing through investment, as opposed to debt.
Aggressive Case
Within this particular scenario, we were presented with different inputs from the aggressive case. A significant factor that we deem noteworthy is the fact that the final salary giveback, taken directly from the teachers’ final year salaries seem to be what fuel the drastic drop in the Net Present Value of unfunded liability, going from 12 billion to -1
billion in a span of only four years. In addition, the NPV decrease is compounded by a significant increase in the assets to liabilities ratio over the same time period.
2
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Journal part B is more important ! So part B solve please
arrow_forward
Please help me to solve this problem
arrow_forward
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
arrow_forward
Don't use ai to answer I will report your answer Solve it Asap with explanation and calculation with all parts
arrow_forward
Please help me.
Thankyou.
arrow_forward
Can you do proper formatting, if you use a table or or excel for the spreadsheet, attach proper image. I have attached an image on how the table should look like.
Also properly format the journal entries, make it easier to understand what is debit what is credit and the dates.
arrow_forward
Not a graded assignment
arrow_forward
Hello there,
Need help with attached question. Thanks much!
arrow_forward
Some please help me solve this question correctly. the answer is NOT, C or D. Both of those were wrong. please help. thank you
arrow_forward
Hello there,
Need help with attached question. Thanks much!
arrow_forward
Assume the following pension data for year 2019:
Service cost $105,000
Contribution $90,000
Actual return $70,000
Benefits $40,000
Plan assets 1/1/19 $700,000
PBO 1/1/19 $810,000
Interest rate 10%
Compute pension expense, PBO 12/31/19 and PA 12/31/19.
Prepare all journal entries.
Show all computations.
I recommend using a pension worksheet, but you can do it without one.
arrow_forward
Current Attempt in Progress
Cullumber Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2025, the following balances relate to this plan.
Plan assets
Projected benefit obligation
Pension asset/liability
Accumulated OCI (PSC)
$465,800
604,200
138,400
95,000 Dr.
As a result of the operation of the plan during 2025, the following additional data are provided by the actuary.
(a)
Service cost
Settlement rate, 10%
Actual return on plan assets
Amortization of prior service cost
Expected return on plan assets
Unexpected loss from change in projected benefit obligation,
due to change in actuarial predictions
Contributions
Benefits paid retirees
$86,600
55,000
19,300
52,000
79,600
102,800
88,300
Using the data above, compute pension expense for Cullumber. for the year 2025 by preparing a pension worksheet. (Enter all amounts as positive)
arrow_forward
Using Excel to Account for Pensions
PROBLEM
Uvo Corporation is a private company with a defined benefit pension plan. The following
information is available for Uvo Corporation for 2023.
Opening balance, DBO
Student Work Area
Required: Provide input into cells shaded in yellow in this template. Use mathematical
formulas with cell references to the Problem and work areas as indicated.
$
210,000
Opening balance, plan assets
200,000
Service cost
58,000
Employer contributions paid evenly through 2023
77,000
Applicable interest or discount rate
10%
Actual return on plan assets
$
25,000
Actuarial loss due to change in actuarial assumptions
14,000
Assuming that Uvo follows IFRS, determine the 2023 effect of the pension plan on
pension expense and the company's shareholders' equity. Display amounts to be
subtracted as negative amounts.
Average plan assets
Defined benefit expense:
Current service cost
Defined benefit expense
Remeasurement gain or loss (OCI):
་
Effect on shareholders' equity
arrow_forward
View Policies
Current Attempt in Progress
The following facts apply to the pension plan of Cullumber Inc. for the year 2020.
Plan assets, January 1, 2020
Projected benefit obligation, January 1, 2020
Settlement rate
Service cost
Contributions (funding)
Actual and expected return on plan assets
Benefits paid to retirees
Items
Balance, January 1, 2020
Using the preceding data, compute pension expense for the year 2020. As part of your solution, prepare a pension worksheet that
shows the journal entry for pension expense for 2020 and the year-end balances in the related pension accounts. (Enter all amounts as
positive.)
Service cost
Interest cost
Actual return
Contributions
Benefits
Journal entry, December 31 $
Balance, December 31, 2020
$
eTextbook and Media
$501,700
501,700
8 %
43,600
25,400
52,100
33,600
Annual Pension
Expense
>
>
$
$
General Journal Entries
Cash
C
Pensi
>
arrow_forward
The accounting staff of Riverbed Inc. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2020.
Annual PensionExpense
Cash
OCI—PriorService Cost
OCI—Gain/Loss
Pension Asset/Liability
Projected BenefitObligation
PlanAssets
Balance, Jan. 1, 2020
$1,298
Cr.
$3,304
$2,006
Service cost
$
590
Interest cost
330
Actual return
260
Unexpected gain
177…
arrow_forward
Hi, can someone help me with this please?
arrow_forward
Hi, for part 2 some of them are wrong I have attached the screenshot, can you please fix it with the correct amounts. Thanks a lot
arrow_forward
Subject: acounting
arrow_forward
Please help with red cross marks and provide the correct solutions. Please format the table correctly so it is easy to understand.
arrow_forward
please answer with full working thanks
arrow_forward
Can someone please help me understand this question and answer. thank you
arrow_forward
please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)
arrow_forward
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
arrow_forward
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
arrow_forward
Subject - account
Please help me.
Thankyou.
arrow_forward
Jay
Give me correct answer with explanation
arrow_forward
Hi,
Help with attached question, thank you!
arrow_forward
Please help me.
Fast solution.
Thankyou.
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Related Questions
- Journal part B is more important ! So part B solve pleasearrow_forwardPlease help me to solve this problemarrow_forwardhelp please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all workingarrow_forward
- Don't use ai to answer I will report your answer Solve it Asap with explanation and calculation with all partsarrow_forwardPlease help me. Thankyou.arrow_forwardCan you do proper formatting, if you use a table or or excel for the spreadsheet, attach proper image. I have attached an image on how the table should look like. Also properly format the journal entries, make it easier to understand what is debit what is credit and the dates.arrow_forward
- Hello there, Need help with attached question. Thanks much!arrow_forwardAssume the following pension data for year 2019: Service cost $105,000 Contribution $90,000 Actual return $70,000 Benefits $40,000 Plan assets 1/1/19 $700,000 PBO 1/1/19 $810,000 Interest rate 10% Compute pension expense, PBO 12/31/19 and PA 12/31/19. Prepare all journal entries. Show all computations. I recommend using a pension worksheet, but you can do it without one.arrow_forwardCurrent Attempt in Progress Cullumber Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2025, the following balances relate to this plan. Plan assets Projected benefit obligation Pension asset/liability Accumulated OCI (PSC) $465,800 604,200 138,400 95,000 Dr. As a result of the operation of the plan during 2025, the following additional data are provided by the actuary. (a) Service cost Settlement rate, 10% Actual return on plan assets Amortization of prior service cost Expected return on plan assets Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions Contributions Benefits paid retirees $86,600 55,000 19,300 52,000 79,600 102,800 88,300 Using the data above, compute pension expense for Cullumber. for the year 2025 by preparing a pension worksheet. (Enter all amounts as positive)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning