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 ACCT VOL.2>CUSTOM<
- Question 11 The following data are for the pension plan for the employees of Cullumber Company. 1/1/20 12/31/20 12/31/21 Accumulated benefit obligation $ 5400000 $ 5410000 $ 6850000 Projected benefit obligation 5560000 5770000 7530000 Plan assets (at fair value) 4600000 6230000 6780000 AOCL – net loss 0 975000 1000000 Settlement rate (for year) 9% 10% Expected rate of return (for year) 9% 8% Cullumber’s contribution was $861000 in 2021 and benefits paid were $751000. Cullumber estimates that the average remaining service life is 15 years.The actual return on plan assets in 2021 was $550000. $360000. $440000. $430000.arrow_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_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
- 6. What amount should be recorded as pension liability on December 31, 2021? ₱ 45,000 ₱ -0- ₱ 20,000 ₱ 25,000arrow_forwardQuestion 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_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
- 4) 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_forwardQualified Retirement Plans Including Section 401(K) Plans (LO 5.4) What is the maximum tax-deferred contribution that can be made to a Section 401(k) plan by an employee under age 50 in 2020? a.$26,000 b.$19,500 c.$19,000 d.$20,000 e.$56,000arrow_forward3 continue b... The following information is available for the pension plan of Vaughn Company for the year 2020. Actual and expected return on plan assets $ 14,700 Benefits paid to retirees 40,800 Contributions (funding) 81,100 Interest/discount rate 10 % Prior service cost amortization 7,600 Projected benefit obligation, January 1, 2020 458,000 Service cost 63,900 Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 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 enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount…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
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT