Concept explainers
(1)
Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.
To determine: PBO as at December 31, 2018 for L Industries
(2)
Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions,
To determine: Plan assets as at December 31, 2018 for L Industries
(3)
Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.
Pension expense includes the following components:
- Service cost
- Interest cost
- Expected return on plan assets
- Amortization of prior service cost
- Amortization of net loss or net gain
To determine: Pension expense as at December 31, 2018 for L Industries
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INTERMEDIATE ACCT VOL.2>CUSTOM<
- 6. What amount should be recorded as pension liability on December 31, 2021? ₱ 45,000 ₱ -0- ₱ 20,000 ₱ 25,000arrow_forwardMN.43. The Black Cat Corp. received the following reports of its defined benefit pension plan for the current calendar year: Q1 Version B.png The long-term expected rate of return on plan assets is 10%. Assuming no other data are relevant, what is the pension expense for the year? Group of answer choices None of the options listed. $225,000. $199,800. $188,000. $335,000.arrow_forward6. New Corporation amends its pension plan on 1/1/20. The following information is available: 1/1/20 before amendment 1/1/20 after amendment Accumulated benefit obligation P 950,000 P1,425,000 Projected benefit obligation 1,300,000 1,900,000 The past service cost as a result of this amendment is Group of answer choices P475,000 P600,000 P125,000 P950,000arrow_forward
- Question 21 Sage Company provides the following selected information related to its defined benefit pension plan for 2020. Pension asset/liability (January 1) $25,600 Cr. Accumulated benefit obligation (December 31) 400,600 Actual and expected return on plan assets 10,400 Contributions (funding) in 2020 148,800 Fair value of plan assets (December 31) 796,000 Settlement rate 10 % Projected benefit obligation (January 1) 698,500 Service cost 79,600 (b) New attempt is in progress. Some of the new entries may impact the last attempt grading. Your answer is partially correct. Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2020. Sage CompanyIncome Statement (Partial)…arrow_forward4) Exercise 17-16 (Static) Determine and record pension expense and gains and losses; funding and retiree benefits [LO17-6, 17-7] Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021: Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $4 million per year) $ 28 million Net loss—AOCI at Jan. 1, 2021 (previous losses exceeded previous gains) $ 80 million Average remaining service life of the active employee group 10 years Actuary's discount rate 7 % ($ in millions) Plan PBO Assets Beginning of 2021 $ 600 Beginning of 2021 $ 400 Service cost 80 Return on plan assets, 8% (10% expected) 32 Interest cost, 7% 42 Loss (gain) on PBO (14 ) Cash contributions 90 Less: Retiree benefits (38 ) Less: Retiree benefits (38 ) End of 2021 $ 670…arrow_forwardQuestion 17 Swifty Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,500. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $144,729 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $908,100, an accumulated benefit obligation of $802,100, and a debit balance of $400,100 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,200 at the beginning of the year. The actual and expected return on plan assets was $54,100. The settlement rate was 9%. No gains or losses occurred in 2020 and no benefits were paid. 4. Amortization of prior service cost was $50,500 in 2020. Amortization of net gain or loss was not required in 2020. (c)…arrow_forward
- Question 20 ## Bonita Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, 2020 December 31, 2020 Vested benefit obligation $1,520 $1,930 Accumulated benefit obligation 1,930 2,700 Projected benefit obligation 2,510 3,360 Plan assets (fair value) 1,730 2,670 Settlement rate and expected rate of return 10% Pension asset/liability 780 ? Service cost for the year 2020 400 Contributions (funding in 2020) 690 Benefits paid in 2020 200 (a3) Indicate the pension amounts reported in the balance sheet. Bonita Company’sBalance Sheet (Partial) $…arrow_forwardQuestion 20 Bonita Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, 2020 December 31, 2020 Vested benefit obligation $1,520 $1,930 Accumulated benefit obligation 1,930 2,700 Projected benefit obligation 2,510 3,360 Plan assets (fair value) 1,730 2,670 Settlement rate and expected rate of return 10% Pension asset/liability 780 ? Service cost for the year 2020 400 Contributions (funding in 2020) 690 Benefits paid in 2020 200 (a2) Partially correct answer icon Your answer is partially correct. Prepare the journal entries at December 31, 2020, to record pension expense and related pension transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)…arrow_forwardQuestion 20 Bonita Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, 2020 December 31, 2020 Vested benefit obligation $1,520 $1,930 Accumulated benefit obligation 1,930 2,700 Projected benefit obligation 2,510 3,360 Plan assets (fair value) 1,730 2,670 Settlement rate and expected rate of return 10% Pension asset/liability 780 ? Service cost for the year 2020 400 Contributions (funding in 2020) 690 Benefits paid in 2020 200 (a2) Prepare the journal entries at December 31, 2020, to record pension expense and related pension transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020…arrow_forward
- Question 20### Bonita Company sponsors a defined benefit pension plan. The corporation’s actuary provides the following information about the plan. January 1, 2020 December 31, 2020 Vested benefit obligation $1,520 $1,930 Accumulated benefit obligation 1,930 2,700 Projected benefit obligation 2,510 3,360 Plan assets (fair value) 1,730 2,670 Settlement rate and expected rate of return 10% Pension asset/liability 780 ? Service cost for the year 2020 400 Contributions (funding in 2020) 690 Benefits paid in 2020 200 (a3) New attempt is in progress. Some of the new entries may impact the last attempt grading. Your answer is partially correct. Indicate the pension amounts reported in the balance sheet. Bonita Company’sBalance Sheet (Partial)…arrow_forwardP 23 In 2022, Red Corp., a C corporation, donated shares of stock to a qualified charitable organization. The shares had a fair market value of $20,000 and an adjusted basis of $100,000. Before any charitable contribution deduction, Red Corp. will have a taxable income of $2,000,000 (no DRD and no loss carryovers) in 2022. What is the amount of Red Corp.'s 2022 charitable contribution deduction? What might Red Corp. want to consider instead of donating the shares of stock to charity?arrow_forwardQ.69. Ben Efit’s employer provides him with the following benefits during the 2022 taxation year: His employer contributed to the company’s registered pension plan on Ben’s behalf: $6,000. Group term life insurance coverage of $100,000; the premium for the coverage is $400. group sickness or accident insurance coverage; the premium paid is $550. A private health services plan with dental coverage; the premium is $800. Mental health counselling: $1,500. Public transit pass; the annual cost is $800. Determine the amount to be included in Ben’s net income for tax purposes for 2022. Show your work!arrow_forward