The actual return on plan assets __is equal to interest expenses accrued each year on the projected benefit obligation, just as it does on any discounted debt. __includes interest, dividends, and changes in the fair value of the fund assets. __is equal to the expected rate of return times the fair value of the plan assets at the beginning of the period. __is equal to the change in the fair value of the plan assets during the year.

The actual return on plan assets is equal to interest expenses accrued each year on the projected benefit obligation, just as it does on any discounted debt. includes interest, dividends, and changes in the fair value of the fund assets. is equal to the expected rate of return times the fair value of the plan assets at the beginning of the period. is equal to the change in the fair value of the plan assets during the year.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 12QE

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Given the following items and amounts, compute the actual return on plan assets: fair value of plan assets at the beginning of the period $9,500,000, benefits paid during the period $1,400,000, contributions made during the period $1,000,000, and fair value of the plan assets at the end of the period $10,150,000.
Bart thinks that projects should be selected based on their NPVs. Assume all cash flows occur at the end of the year except for initial investment amounts. Calculate the NPV for each project. Ignore income taxes.
The projected benefit obligation was $140 million at the beginning of the year and $145 million at the end of the year. Service cost for the year was $7 million. At the end of the year, pension benefits paid by the trustee were $3 million. The actuary’s discount rate was 5%. At the end of the year, the actuary revised the estimate of the percentage rate of increase in compensation levels in upcoming years. What was the amount of the gain or loss the estimate change caused?
Strangers & Co. has gathered the following information for its defined benefit plan in 2020:· Projected Benefit Obligation, 1/1/2020: P3,000,000· Projected Benefit Obligation, 12/31/2020: P3,355,000· Fair value of plan assets, 1/1/2020: P1,600,000· Fair value of plan assets, 12/31/2020: P2,260,000Current service cost for the year is P155,000, contributions to the fund totaled P500,000, and the actual return and interest income on the plan asset was P160,000. No benefits are paid during 2020. During the year, there was a decrease only in the projected benefit obligation due to revision of actuarial assumptions. How much should be recognized as Retirement/Employee Benefit Expense for 2020? a. 195,000 b. 295,000 c. 795,000 d. 500,000
If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32 are made starting on December 31, 2020, that will deplete the fund, what is the interest rate being earned if interest is compounded annually?
Leaf Products may issue a 10-year maturity fixed-income security, which might include a sinking fund provision and either refunding or call protection.a. Describe a sinking fund provision.b. Explain the impact of a sinking fund provision on:i. The expected average life of the proposed security.ii. Total principal and interest payments over the life of the proposed security.c. From the investor’s point of view, explain the rationale for demanding a sinking fund provision.
The accumulated benefit obligation measures __the shortest possible period for funding to maximize the tax deduction. __the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels. __the level cost that will be sufficient, together with interest to provide the total benefits at retirement. __the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels.
Information on Complicated Company's defined benefit plan is as follows: Fair value of plan assets, Jan. 1 - P480,000; Return on plan assets (Actual rate of return for the period) - 10%; Contributions to the retirement fund during the year - P800,000; Benefits paid to retirees - P200,000. How much is the balance of the fair value of plan assets as of year-end?
Assume that the fund is liquidated at the end of the fourth quarter, what are the arithmetic, time-weighted (geometric), and dollar-weighted average rates of return? 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Assets Under Managment at start of quarter ($ milion) 10 12.5 21.25 9 Holding-period return (%) 15% 30% -20% 25% Total assets before net inflows 11.5 16.25 17 11.25 Net inflow ($ million) 1 5 -8 6 Assets under managment at end of quarter ($ million) 12.5 21.25 9 17.25
JDS Shipyard's projected benefit obligation, accumulated benefit obligation, and plan assets were $75 million, $65 million, and $57 million, respectively, at the end of the year. a. What, if any, pension liability or pension asset must be reported in the balance sheet?b. What, if any, pension liability or pension asset must be reported in the balance sheet if the plan assets were $89 million instead?
On January 1, 2020, FB Company had the following data in connection with its defined benefit plan: Fair value of plan assets- P6,500,000 • Defined benefit obligation- P7,500,000 The accountant revealed the following information for the current year. • Current service costs- P1,600,000 • Discount rate- 10% • Actual return on plan assets-P600,000 . Expected return on plan assets- 8% . Contribution to the plan- P1,500,000 How much is the retirement benefit expense in 2020? A.P1,830,000 B.P1,600,000 C.P2,350,000 D.P1,750,000
Calculate the amount that J&J’s retirement fund obligations are underfunded as of each year-end. How much of the underfunding is reported on the company’s balance sheet?