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Carla Vista, Inc. on January 1, 2021 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 109 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 109 employees who are expected to receive benefits under the plan is 1,308. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2021 was $5,628,000. On December 31, 2021 the following information was provided concerning the pension plan's operations for its first year. Employer's contribution at end of year Service cost Projected benefit obligation Plan assets (at fair value) Expected return on plan assets Settlement rate $1,690,000 690,000 6,606,600 1,690,000 9% W 8%

Carla Vista, Inc. on January 1, 2021 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 109 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 109 employees who are expected to receive benefits under the plan is 1,308. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2021 was $5,628,000. On December 31, 2021 the following information was provided concerning the pension plan's operations for its first year. Employer's contribution at end of year Service cost Projected benefit obligation Plan assets (at fair value) Expected return on plan assets Settlement rate $1,690,000 690,000 6,606,600 1,690,000 9% W 8%

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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Carla Vista, Inc. on January 1, 2021 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 109 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 109 employees who are expected to receive benefits under the plan is 1,308. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2021 was $5,628,000. On December 31, 2021 the following information was provided concerning the pension plan's operations for its first year. Employer's contribution at end of year Service cost Projected benefit obligation Plan assets (at fair value) Expected return on plan assets Settlement rate (a) Pension expense $1,690,000 $ 690,000 6,606,600 1,690,000 Compute the pension expense recognized in 2021. Assume the prior service cost is amortized over the average remaining service life of the employees. 8%
Transcribed Image Text:Carla Vista, Inc. on January 1, 2021 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 109 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 109 employees who are expected to receive benefits under the plan is 1,308. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2021 was $5,628,000. On December 31, 2021 the following information was provided concerning the pension plan's operations for its first year. Employer's contribution at end of year Service cost Projected benefit obligation Plan assets (at fair value) Expected return on plan assets Settlement rate (a) Pension expense $1,690,000 $ 690,000 6,606,600 1,690,000 Compute the pension expense recognized in 2021. Assume the prior service cost is amortized over the average remaining service life of the employees. 8%
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