Cummings Inc. had the following reconciliation at December 31, 20X0: Fair value of plan assets$5,000 PBO 4,200 Funded status$800 AOCI—prior service cost$300 AOCI—net actuarial loss 700 Total pension AOCI loss$1,000 The following assumptions are being used for the pension plan in 20X1: Discount rate5%Expected rate of return on plan assets8%Average remaining work life10YearsRemaining amortization period for prior service costs6Years Additional 20X1 Information: Service cost$442 Cash contributed to the plan (year-end) 250 Pension benefits paid by the plan (year-end) 465 Actual return on plan assets 673 New actuarial loss on the PBO 64 Required:Compute pension expense for 20X1.Compute the fair value of plan assets at December 31, 20X1.Compute the PBO at December 31, 20X1.Compute AOCI—net actuarial loss as of December 31, 20X1. Cummings Inc. had the following reconciliation at December 31, 20X0:Fair value of plan assetsPBOFunded statusAOCI-prior service costAOCI-net actuarial lossTotal pension AOCI loss$5,0004,200800300700$1,000The following assumptions are being used for the pension plan in 20X1:Additional 20X1 Information:$$Discount rateExpected rate of return on plan assetsAverage remaining work lifeRemaining amortization period for prior service costsService costCash contributed to the plan (year-end)Pension benefits paid by the plan (year-end)Actual return on plan assetsNew actuarial loss on the PBORequired:1. Compute pension expense for 20X1.2. Compute the fair value of plan assets at December 31, 20X1.3. Compute the PBO at December 31, 20X1.4. Compute AOCI-net actuarial loss as of December 31, 20X1.5%8%10 Years6 Years$44225046567364

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Answered: Cummings Inc. had the following…

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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Cummings Inc. had the following reconciliation at December 31, 20X0:


Fair value of plan assets	$	5,000
PBO		4,200
Funded status	$	800
AOCI—prior service cost	$	300
AOCI—net actuarial loss		700
Total pension AOCI loss	$	1,000

The following assumptions are being used for the pension plan in 20X1:


Discount rate	5	%
Expected rate of return on plan assets	8	%
Average remaining work life	10	Years
Remaining amortization period for prior service costs	6	Years

Additional 20X1 Information:


Service cost	$	442
Cash contributed to the plan (year-end)		250
Pension benefits paid by the plan (year-end)		465
Actual return on plan assets		673
New actuarial loss on the PBO		64

Required:

Compute pension expense for 20X1.
Compute the fair value of plan assets at December 31, 20X1.
Compute the PBO at December 31, 20X1.
Compute AOCI—net actuarial loss as of December 31, 20X1.

Cummings Inc. had the following reconciliation at December 31, 20X0:
Fair value of plan assets
PBO
Funded status
AOCI-prior service cost
AOCI-net actuarial loss
Total pension AOCI loss
$5,000
4,200
800
300
700
$1,000
The following assumptions are being used for the pension plan in 20X1:
Additional 20X1 Information:
$
$
Discount rate
Expected rate of return on plan assets
Average remaining work life
Remaining amortization period for prior service costs
Service cost
Cash contributed to the plan (year-end)
Pension benefits paid by the plan (year-end)
Actual return on plan assets
New actuarial loss on the PBO
Required:
1. Compute pension expense for 20X1.
2. Compute the fair value of plan assets at December 31, 20X1.
3. Compute the PBO at December 31, 20X1.
4. Compute AOCI-net actuarial loss as of December 31, 20X1.
5%
8%
10 Years
6 Years
$442
250
465
673
64

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