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Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 20X1 and 20X2 related to the pension plan:

Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 20X1 and 20X2 related to the pension plan:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 20X1 and 20X2 related to the pension plan: Projected benefit obligation, 1/1 Service cost Actual return on plan assets. Bonny Corp. contributions for year ended 12/31 Benefits paid during year Fair value of plan assets, 1/1 Actuarial (gain) loss on PBO during year Expected return on plan assets Discount rate 45 1. 2. 3. Funded status of plan at 12/31 PBO at 12/31 Plan assets at 12/31 4. AOCI - net actuarial loss (gain) at 12/31 X Answer is not complete. 20X2 5. OCI for the year ended 12/31 20X2 Bonny Corp. had no beginning balance in its AOCI-net actuarial (gain) loss on January 1, 20X1. The actuarial (gains) losses on PBO arose due to changes in assumptions made by the actuaries regarding salary increases (20X1) and mortality estimates (20X2). $ 70,000 66,400 74,000 67,000 ? (13,000) Required: 1. Compute Bonny's PBO at December 31, 20X1, and December 31, 20X2. 2. Compute the fair value of plan assets at December 31, 20X1, and December 31, 20X2. 3. Compute the funded status of the plan at December 31, 20X1, and December 31, 20x2. 4. Compute the year-end balance in AOCI-net actuarial loss (gain) for Bonny Corp. for 20X1 and 20X2. 5. Compute OCI for the years ended December 31, 20X1, and December 31, 20X2. (For parts 3, 4, and 5, liabilities and losses should be indicated by a minus sign.) 20X1 ? $ 750,000 60,000 20X1 7% 6% $ 753,400 $ 680,000 72,000 68,000 60,000 600,000 4,400 7% 6%
Transcribed Image Text:Bonny Corp. has a defined benefit pension plan for its employees who have an average remaining service life of 10 years. The following information is available for 20X1 and 20X2 related to the pension plan: Projected benefit obligation, 1/1 Service cost Actual return on plan assets. Bonny Corp. contributions for year ended 12/31 Benefits paid during year Fair value of plan assets, 1/1 Actuarial (gain) loss on PBO during year Expected return on plan assets Discount rate 45 1. 2. 3. Funded status of plan at 12/31 PBO at 12/31 Plan assets at 12/31 4. AOCI - net actuarial loss (gain) at 12/31 X Answer is not complete. 20X2 5. OCI for the year ended 12/31 20X2 Bonny Corp. had no beginning balance in its AOCI-net actuarial (gain) loss on January 1, 20X1. The actuarial (gains) losses on PBO arose due to changes in assumptions made by the actuaries regarding salary increases (20X1) and mortality estimates (20X2). $ 70,000 66,400 74,000 67,000 ? (13,000) Required: 1. Compute Bonny's PBO at December 31, 20X1, and December 31, 20X2. 2. Compute the fair value of plan assets at December 31, 20X1, and December 31, 20X2. 3. Compute the funded status of the plan at December 31, 20X1, and December 31, 20x2. 4. Compute the year-end balance in AOCI-net actuarial loss (gain) for Bonny Corp. for 20X1 and 20X2. 5. Compute OCI for the years ended December 31, 20X1, and December 31, 20X2. (For parts 3, 4, and 5, liabilities and losses should be indicated by a minus sign.) 20X1 ? $ 750,000 60,000 20X1 7% 6% $ 753,400 $ 680,000 72,000 68,000 60,000 600,000 4,400 7% 6%
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