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1.
Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.
To Compute: The PBO for the year December 31, 2018.
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 Compute: The plan assets for the year December 31, 2018.
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 Compute: The pension expense for the year December 31, 2018.
4.
Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.
To Compute: The net pension (liability) or asset for the year December 31, 2018.
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Chapter 17 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- Question 19 Tyson, Inc sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2021. Service cost $345.000 330,000 270.000 Plan contributions Actual return on plan assets Projected benefit obligation January 1 Fair value of plan assets, January 1 3,600,000 2,400,000 The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2021 is: OA$705,000 OR$465,000 Oc$435.000 OD$345.000arrow_forwardk 1 ces Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2021. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. The actual return was also 10% in 2021 and 2022. A consulting firm, engaged as actuary, recommends 5% as the appropriate discount rate. The service cost is $180,000 for 2021 and $230,000 for 2022. Year-end funding is $190,000 for 2021 and $200,000 for 2022. No assumptions or estimates were revised during 2021. "We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that, since the estimate didn't change, that also was the actual rate in 2022 Required: Calculate each of the following amounts as of both December 31, 2021, and December 31, 2022 (Enter your answers in thousands (.e., 200,000 should be entered as 200).) 1. Projected benefit obligation 2. Plan assets 3.…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
- PROBLEM NO. 1 Mermade Corp. adopts the IFRS for its defined benefit retirement plan on January 1, 2021, with the following beginning balances: Fair Value of Plan Assets are Php 200,000.00 Defined Benefit Obligation is Php is 250,000.00 The following are other information relating to the years 2021, 2022, and 2023: 2023 2022 2021 P26,000.00 P 19,000.00 P 16,000.00 10% 10% 10% 20,000.00 24,000.00 22,000.00 48,000.00 40,000.00 16,000.00 21,000.00 16,400.00 14,000.00 Current service cost Discount rate Actual return on plan assets Contributions to the plan Benefits paid to retiree Other information: 1. The plan was amended on January 1, 2022 which resulted to a Past Service Cost of Php 160,000.00 2. On December 31, 2023, there were changes in the actuarial assumptions that establishes a defined benefit obligation as of December 31, 2023 in the amount of Php 520,000.00. Required: For each year (2021, 2022, and 2023), prepare a worksheet presenting the balances and the activities of the…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 16# Buffalo Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $463,200 Projected benefit obligation 578,200 Pension asset/liability 115,000 Accumulated OCI (PSC) 100,100 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,600 Settlement rate, 8% Actual return on plan assets 53,200 Amortization of prior service cost 18,000 Expected return on plan assets 50,200 Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions 79,600 Contributions 99,600 Benefits paid retirees 85,100 (b) Prepare the journal entry for pension expense for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the…arrow_forward
- Question 16## Buffalo Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $463,200 Projected benefit obligation 578,200 Pension asset/liability 115,000 Accumulated OCI (PSC) 100,100 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,600 Settlement rate, 8% Actual return on plan assets 53,200 Amortization of prior service cost 18,000 Expected return on plan assets 50,200 Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions 79,600 Contributions 99,600 Benefits paid retirees 85,100 Also please help me answer part B. (b) Prepare the journal entry for pension expense for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…arrow_forwardThe following data relate to Ramesh Company's defined benefit pension plan: ($ in millions) $640 64 51 108 11 15 80 Plan assets at fair value, January 1 Expected return on plan assets Actual return on plan assets Contributions to the pension fund (end of year) Amortization of net loss Pension benefits paid (end of year) Pension expense Required: Determine the amount of pension plan assets at fair value on December 31. (Enter your answers in millions. Amounts to be deducted should be indicated with a minus sign.) Pension Plan Assets Beginning of the year End of the yeararrow_forwardExercise 17-10 (Algo) Determine pension expense [LO17-6, 17-7] Abbott and Abbott has a noncontributory, defined benefit pension plan. At December 31, 2021, Abbott and Abbott received the following information: Projected Benefit Obligation Balance, January 1 Service cost ($ in millions) $125 22 Interest cost 15 Benefits paid (8) Balance, December 31 $154 Plan Assets Balance, January 1 Actual return on plan assets $75 10 Contributions 2021 22 Benefits paid |(8) Balance, December 31 $99 The expected long-term rate of return on plan assets was 12%. There was no prior service cost and a negligible net loss-AOCI on January 1, 2021. Required: 1. Determine Abbott and Abbott's pension expense for 2021. 2 Prenare the iournal entries to record Abbott ancd Abbott's a) pension expense (6) fundina and (c) pavment for 2021arrow_forward
- Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2024 are as follows: ($ millions) $480 350 75 45 P80 balance, January 11 Plan assets balance, January 1 Service cost Interest cost Gain from change in actuarial assumption Benefits paid Actual return on plan assets. Contributions 2024 26 (36) 23 65 The expected long-term rate of return on plan assets was 8%. There were no AOCI balances related to pensions on January 1, 2024, but at the end of 2024, the company amended the pension formula, creating a prior service cost of $13 million.arrow_forwardPlease need answer for all with full working please answer all with steps computation explanation formula please answer all Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2024. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. The actual return was also 10% in 2024 and 2025.* A consulting firm, engaged as actuary, recommends 5% as the appropriate discount rate. The service cost is $160,000 for 2024 and $210,000 for 2025. Year-end funding is $170,000 for 2024 and $180,000 for 2025. No assumptions or estimates were revised during 2024. *We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that, since the estimate didn't change, that also was the actual rate in 2025. Required: Calculate each of the following amounts as of both December 31, 2024, and December 31, 2025:…arrow_forwardQuestion 16 Buffalo Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances relate to this plan. Plan assets $463,200 Projected benefit obligation 578,200 Pension asset/liability 115,000 Accumulated OCI (PSC) 100,100 Dr. As a result of the operation of the plan during 2020, the following additional data are provided by the actuary. Service cost $86,600 Settlement rate, 8% Actual return on plan assets 53,200 Amortization of prior service cost 18,000 Expected return on plan assets 50,200 Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions 79,600 Contributions 99,600 Benefits paid retirees 85,100 Prepare the journal entry for pension expense for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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