INTERMEDIATE ACCT.CUSTOM W/CONNECT
10th Edition
ISBN: 9781307690804
Author: SPICELAND
Publisher: MCG/CREATE
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Question
Chapter 17, Problem 17.8DMP
(1)
To determine
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
Prior service cost: When a pension plan is amended by the company, the retroactive effect of the amendment is attributed to the projected benefit obligation (PBO). Such an increase in cost of pension plan is referred to as prior service cost.
To discuss: The increased cost due to amended pension plan, and the method of accounting it
(2)
To determine
To discuss: The effect of recent labor negotiations on unfunded pension obligation and pension expense, and its unfavorable impact
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QUESTION 3 Bacon Bad is a national diner that has set up
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company uses IFRS and has provided you with the
following information pertaining to its pension plan:
Pension obligation, December 31,2021 - $6854203 Plan
assets, December 31, 2021 - $5906519 Interest rate on
pension obligations - 3% Current service cost for the year
(accrued at the end of the year) - $598059 Improvement in
pension plan, effective on January 1, 2022 - $62000
Actuarial gain on change in assumptions - $0 Expected
retum on plan assets -3% of plan assets Actual return on
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Problem 5-14 (Algo) Deferred annuities; pension obligation [LO5-8, 5-10]
Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The
employees will receive their annual payments for as long as they live. Life expectancy for each employee is 14 years beyond
retirement. Their names, the amount of their annual pension payments, and the date they will receive their first payment are shown
below:
Employee
Tinkers
Evers
Chance
Annual
Payment
$ 23,000
28,000
33,000
Required:
1. Compute the present value of the pension obligation to these three employees as of December 31, 2024. Assume an 11% interest
rate.
2. The company wants to have enough cash invested at December 31, 2027, to provide for all three employees. To accumulate
enough cash, they will make three equal annual contributions to a fund that will earn 11% interest compounded annually. The first
contribution will be made on December 31, 2024. Compute the amount of…
k
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.…
Chapter 17 Solutions
INTERMEDIATE ACCT.CUSTOM W/CONNECT
Ch. 17 - Prob. 17.1QCh. 17 - Prob. 17.2QCh. 17 - Prob. 17.3QCh. 17 - What is the vested benefit obligation?Ch. 17 - Prob. 17.5QCh. 17 - Prob. 17.6QCh. 17 - Name three events that might change the balance of...Ch. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - Prob. 17.10Q
Ch. 17 - The return on plan assets is the increase in plan...Ch. 17 - Define prior service cost. How is it reported in...Ch. 17 - Prob. 17.13QCh. 17 - Is a companys PBO reported in the balance sheet?...Ch. 17 - What two components of pension expense may be...Ch. 17 - Prob. 17.16QCh. 17 - Evaluate this statement: The excess of the actual...Ch. 17 - Prob. 17.18QCh. 17 - TFC Inc. revises its estimate of future salary...Ch. 17 - Prob. 17.20QCh. 17 - Prob. 17.21QCh. 17 - Prob. 17.22QCh. 17 - The components of postretirement benefit expense...Ch. 17 - The EPBO for Branch Industries at the end of 2018...Ch. 17 - Prob. 17.25QCh. 17 - Prob. 17.26QCh. 17 - Prob. 17.1BECh. 17 - Prob. 17.2BECh. 17 - Prob. 17.3BECh. 17 - Prob. 17.4BECh. 17 - Prob. 17.5BECh. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Net gain LO176 The projected benefit obligation...Ch. 17 - Prob. 17.12BECh. 17 - Prob. 17.13BECh. 17 - Postretirement benefits; determine the APBO and...Ch. 17 - Prob. 17.1ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Prob. 17.5ECh. 17 - Prob. 17.6ECh. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Prob. 17.9ECh. 17 - Prob. 17.14ECh. 17 - Prob. 17.17ECh. 17 - Prob. 17.23ECh. 17 - Prob. 17.32ECh. 17 - Prob. 17.33ECh. 17 - Prob. 17.1DMPCh. 17 - Prob. 17.2DMPCh. 17 - Prob. 17.3DMPCh. 17 - Prob. 17.5DMPCh. 17 - Prob. 17.6DMPCh. 17 - Prob. 17.8DMPCh. 17 - Prob. 17.9DMPCh. 17 - Prob. 17.11DMPCh. 17 - Prob. 1CCTCCh. 17 - Prob. 2CCTC
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