Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
Chapter 19, Problem 11RE
To determine
Calculate the amount of postretirement benefit expense of Company B for the current year.
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Company A has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% multiplied by the number of years in service multiplied by the final year’s salary. The annual benefit is payable at the end of each year.
An employee was hired by the entity on January 1,2000 and expected to retire on December 31, 2044. The employee’s retirement is expected to span 21 years.
The employee’s final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%.
On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years.
Compute for the ff:
1)PBO, Jan 1, 2020 (before amendment), Jan 1, 2020 (after amendment), Dec. 31,2020, Dec. 31, 2021 and Dec. 31 2022
2)Past service cost, 2020, 2021 and 2022
3)Current service cost, 2020, 2021 and 2022
4)Interest expense, 2020, 2021 and 2022
À lump sum benefit is payable on termination of service and equal to 1% of final salary for each year of service. The salary in Year 1 is P10,000 and is assumed to increase at 7% (compound) each year. The discount rate used is 104 per year. The entity does not fund its obligation to pay lump sum benefits. The employee is expected to leave at the end of Year 5. The defined benefit liability (deficit) at the end of the second year is
Greg Company provides retirement benefits to employees through defined contribution plan. The plan provides that Greg Company shall contribute annually 9% of gross payroll to a funding agency. In addition, the entity is also required to contribute 6% of annual sales exceeding 15,000,000. During 2020, gross payroll of the company was P 6,500,000 and total sales amounted to P 32,000,000.
How much is the retirement benefit expense taken to profit or loss for the year 2020?
Assuming that during 2020, the company contributed P 1,700,000 to the trustee. How much is the prepaid or accrued benefit arising from the transaction?
Chapter 19 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 19 - Prob. 1GICh. 19 - Prob. 2GICh. 19 - Prob. 3GICh. 19 - Prob. 4GICh. 19 - Prob. 5GICh. 19 - Prob. 6GICh. 19 - Prob. 7GICh. 19 - Prob. 8GICh. 19 - Prob. 9GICh. 19 - Prob. 10GI
Ch. 19 - Prob. 11GICh. 19 - Prob. 12GICh. 19 - Prob. 13GICh. 19 - Prob. 14GICh. 19 - Prob. 15GICh. 19 - Prob. 16GICh. 19 - Prob. 17GICh. 19 - Prob. 18GICh. 19 - Prob. 19GICh. 19 - Prob. 20GICh. 19 - Prob. 21GICh. 19 - Prob. 22GICh. 19 - Prob. 23GICh. 19 - The actuarial present value of all the benefits...Ch. 19 - Prob. 2MCCh. 19 - Prob. 3MCCh. 19 - Prob. 4MCCh. 19 - Prob. 5MCCh. 19 - Prob. 6MCCh. 19 - Which of the following is not a component of...Ch. 19 - Prob. 8MCCh. 19 - Prob. 9MCCh. 19 - Prob. 10MCCh. 19 - Prob. 1RECh. 19 - Prob. 2RECh. 19 - Pinecone Company has plan assets of 500,000 at the...Ch. 19 - Prob. 4RECh. 19 - Prob. 5RECh. 19 - Prob. 6RECh. 19 - Prob. 7RECh. 19 - Prob. 8RECh. 19 - Given the following information for Tyler Companys...Ch. 19 - At the beginning of Year 1, Cactus Company has...Ch. 19 - Prob. 11RECh. 19 - Prob. 1ECh. 19 - Prob. 2ECh. 19 - Prob. 3ECh. 19 - Prob. 4ECh. 19 - Prob. 5ECh. 19 - Prob. 6ECh. 19 - Prob. 7ECh. 19 - Prob. 8ECh. 19 - Prob. 9ECh. 19 - Prob. 10ECh. 19 - Prob. 11ECh. 19 - Prob. 12ECh. 19 - Prob. 13ECh. 19 - Refer to the information provided in E19-13....Ch. 19 - Prob. 15ECh. 19 - Prob. 16ECh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 9PCh. 19 - Prob. 10PCh. 19 - Prob. 11PCh. 19 - Prob. 12PCh. 19 - Prob. 1CCh. 19 - Prob. 2CCh. 19 - Prob. 3CCh. 19 - Prob. 4CCh. 19 - Prob. 5CCh. 19 - Prob. 6CCh. 19 - Prob. 7CCh. 19 - Prob. 9C
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- Borat Company gives annual bonuses after the end of the year. Borat computes the bonuses based on the companys net income after deducting the bonuses but before deducting income taxes. Borats income before bonuses and income taxes is 565,000 for the current year. The effective income tax rate is 21%, and the bonus rate is 12%. Calculate Borats bonuses and income taxes for the current year. Round your final answer to two decimal places.arrow_forwardIn 2019, Magenta Corporation paid compensation of 45,300 to the participants in a profit sharing plan. During 2019, Magenta Corporation contributed 13,200 to the plan. a. Calculate Magentas deductible amount for 2019. b. Calculate the amount of any contribution carryover from 2019.arrow_forwardCompany A has established a defined benefit plan for the employee. Annual payments under the plan are equal to highest lifetime salary multiplied by 2% multiplied by the number of years with the entity. On December 31, 2020, an employee had worked with the entity for 15 years. The current annual salary of the employee is P600,000. The employee is expected to retire in 10 years and the increase in salary is expected to be 4% per year. The discount rate is 10%. The employee is expected to live 8 years after retirement and shall receive the first annual pension payment one year after retirement. Compute for the ff: 1)Current service cost in 2021, 2022, 2023 and 2024 2)Interest expense in 2021, 2022, 2023 and 2024 3)PBO, Dec. 31,2021, Dec. 31,2022, Dec. 31,2023 and Dec. 31,2024arrow_forward
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