Larkspur, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan. Average length of time to retirement 15 years Expected life duration after retirement 10 years Total pension payment expected each year after retirement for all employees. Payment made at the end of the year. $812,100 per year The interest rate to be used is 9%. Click here to view factor tables On the basis of the information above, determine the present value of the pension obligation (liability). (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, eg. 458,581.) The present value of pension obligation (liability) $
Larkspur, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan. Average length of time to retirement 15 years Expected life duration after retirement 10 years Total pension payment expected each year after retirement for all employees. Payment made at the end of the year. $812,100 per year The interest rate to be used is 9%. Click here to view factor tables On the basis of the information above, determine the present value of the pension obligation (liability). (Round factor values to 5 decimal places, eg. 1.25124 and final answer to O decimal places, eg. 458,581.) The present value of pension obligation (liability) $
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter19: Accounting For Post Retirement Benefits
Section: Chapter Questions
Problem 6E
Related questions
Question
Transcribed Image Text:Larkspur, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union,
the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each
employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the
controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the
Personnel Department and an actuary from an insurance company, the controller develops the following information related to the
pension plan.
Average length of time to retirement
15 years
Expected life duration after retirement
10 years
Total pension payment expected each year after retirement
for all employees. Payment made at the end of the year.
$812,100 per year
The interest rate to be used is 9%.
Click here to view factor tables
On the basis of the information above, determine the present value of the pension obligation (liability). (Round factor values to 5
decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.)
The present value of pension obligation (liability)
$
|
%24
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT