Differentiate between a defined contribution pension plan and defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.
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1. Differentiate between a defined contribution pension plan and defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.
2. What is meant by past service cost? When is past service cost recognized as pension expense?
3. How does an “asset gain or loss” develop in pension accounting?
4. At January 1, 2015, Uddin Company had plan assets of $250,000 and a defined benefit obligation of the same amount. During 2015, service cost was $27,500 ,the discount rate was 10%, actual return on plan assets was $25,000, contributions were $20,000 and benefits paid were $17,500. Prepare a pension worksheet for Uddin Company for 2015.
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- for the year 2025 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2025 amounted to $55,500. 2. The company's funding policy requires a contribution to the pension trustee amounting to $136, 360 for 2025. As of January 1, 2025, the company had a projected benefit obligation of $894, 500, an accumulated benefit obligation of $806, 900, and a debit balance of $ 396,000 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $600,000 at the beginning of the year. The actual and expected return on plan assets was $53,500. The settlement rate was 8%. No gains or losses occurred in 2025 and no benefits were paid. Carla Vista Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan 4. Amortization of prior service cost was $ 49,800 in 2025. Amortization of net gain or loss was not required in 2025. Indicate the amounts that would be…Hicks Cable Company has a defined benefit pension plan. Three alternative possibilities for pension-related data at January 1, 2021, are shown below: ($ in thousands) Case 1 Case 2 Case 3 Net loss (gain)—AOCI, Jan. 1 $ 335 $ (397 ) $ 305 2021 loss (gain) on plan assets (26 ) (23 ) 5 2021 loss (gain) on PBO (38 ) 31 (310 ) Accumulated benefit obligation, Jan. 1 (3,100 ) (2,700 ) (1,600 ) Projected benefit obligation, Jan. 1 (3,460 ) (2,820 ) (1,850 ) Fair value of plan assets, Jan. 1 2,950 2,850 1,700 Average remaining service periodof active employees (years) 12 14 10 Required:1. For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2021.2. For each independent case, determine the net loss—AOCI or net gain—AOCI as of January 1, 2022.Presented below is pension information for A Company for the year 2016: Interest on plan assets P24,000 Interest on vested benefits 10,000 Service cost 35,000 Interest on defined benefit obligation 21,000 Past service cost due to increase in benefits 18,000 The amount of pension expense to be reported for 2016 is
- Hicks Cable Company has a defined benefit pension plan. Three alternative possibilities for pension-related data at January 1, 2021, are shown below: ($ in thousands) Case 1 Case 2 Case 3 Net loss (gain)—AOCI, Jan. 1 $ 337 $ (407 ) $ 297 2021 loss (gain) on plan assets (28 ) (25 ) 5 2021 loss (gain) on PBO (40 ) 33 (301 ) Accumulated benefit obligation, Jan. 1 (3,120 ) (2,720 ) (1,620 ) Projected benefit obligation, Jan. 1 (3,480 ) (2,840 ) (1,870 ) Fair value of plan assets, Jan. 1 2,970 2,870 1,720 Average remaining service periodof active employees (years) 12 15 10 Required:1. For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2021.2. For each independent case, determine the net loss—AOCI or net gain—AOCI as of January 1, 2022.(Pension Expense, Journal Entries, Statement Presentation) Ferreri Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension planfor the year ended December 31, 2017. Check below image for information. The service cost component of pension expense for employee services rendered in the current year amounted to $77,000 and the amortization of prior service cost was $120,000. The company’s actual funding (contributions) of the plan in 2017 amounted to $250,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,200,000 on January 1, 2017. Assume no benefits paid in 2017.Instructions(a) Determine the amounts of the components of pension expense that should be recognized by the company in 2017.(b) Prepare the journal entry to record pension expense and the employer’s…4) Electronic Distribution has a defined benefit pension plan. Characteristics of the plan during 2021 are as follows: ($ millions) PBO balance, January 1 $ 480 Plan assets balance, January 1 350 Service cost 75 Interest cost 45 Gain from change in actuarial assumption 26 Benefits paid (36 ) Actual return on plan assets 23 Contributions 2021 65 The expected long-term rate of return on plan assets was 8%. There were no AOCI balances related to pensions on January 1, 2021, but at the end of 2021, the company amended the pension formula, creating a prior service cost of $13 million. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Required: 1. Calculate the pension expense for 2021.2. Prepare the journal entries to record (a) pension expense, (b) gains or losses, (c) prior service cost, (d) funding, and (e) payment of benefits for 2021.3. What amount will Electronic Distribution report in…
- (Pension Expense, Journal Entries) Latoya Company provides the following selected information related to its defined benefit pension plan for 2017. Check the below image for information. Instructions(a) Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017. Preparation of a pension worksheet is not required. Benefits paid in 2017 were $35,000.(b) Indicate the pension-related amounts that would be reported in the company’s income statement and balance sheet for 2017.Beale Management has a noncontributory, defined benefit pension plan. On December 31, 2021 (the end of Beale's fiscal year), the following pension-related data were available: Projected Benefit Obligation Balance, January 1, 2021 Service cost Interest cost, discount rate, 5% Gain due to changes in actuarial assumptions in 2021 Pension benefits paid. Balance, December 31, 2021 Plan Assets Balance, January 1, 2021 Actual return on plan assets (Expected return on plan assets, $48) Cash contributions Pension benefits paid Balance, December 31, 2021 January 1, 2021, balances: Pension asset Prior service cost-AOCI (amortization $5 per year) Net gain-AOCI (any amortization over 10 years) ($ in millions) $ 710 43 84 (33) $804 ($ in millions) $ 660 68 33 (17) (33) $711 ($ in millions) $ 50 25 121A company has a noncontributory, defined benefit pension plan. On December 31 of the current year (the end of the company's fiscal year), the following pension-related data were available: Projected Benefit Obligation Balance, January 1, current year Service cost Interest cost, discount rate, 5% Gain due to changes in actuarial assumptions in current year Pension benefits paid Balance, December 31, current year Plan Assets Balance, January 1, current year Actual return on plan assets (Expected return on plan assets, $46) Cash contributions Pension benefits paid Balance, December 31, current year January 1, current year, balances: Pension asset Prior service cost-AOCI (amortization $8 per year) Net gain-AOCI (any amortization over 10 years) (5 in millions) Balance, January 1, current year Service cost Interest cost, 5% Expected return on assets Adjust for Loss on assets Amortization of Prior service cost Net gain Gain on PBO Cash funding Retiree benefits Balance, December 31, curent…
- Putnam Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $19,500 for the period. The pension formula calculated a pension cost of $264,000. Only $15,840 was contributed to the pension plan administrator. (a) Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank. (b) Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank.Kath Company's pension plan began on 1/1/20. During 2020 it earned $21 more on its assets than it expected and changes in actuarial assumptions caused the PBO to increase by $13. In 2021, actual earnings on plan assets was $9 and expected return was $14. During 2021, actuaries determined that life expectancies are longer than originally estimated, causing the PBO to change by $12. Gain/loss did not need to be amortized in 2020 or 2021. What is unamortized gain or loss on 12/31/21? Provide a dollar amount and circle gain or loss.Hicks Cable Company has a defined benefit pension plan. Three alternative possibilities for pension-related data at January 1, 2024, are shown below. Net loss (gain)-AOCI, January 1 2024 loss (gain) on plan assets 2024 loss (gain) on PBO Accumulated benefit obligation, January 1 Projected benefit obligation, January 1 Fair value of plan assets, January 1 Average remaining service period of active employees (years) Required: ($ in thousands) Case 1 Case 2 Case 3 $ 340 $ (410) 281 (31) (28) 6 (43) 36 (3,150) (2,750) (290) (1,650) (3,510) (2,870) 3,000 2,900 (1,900) 1,750 10 12 7 1. For each independent case, calculate any amortization of the net loss or gain that should be included as a component of pension expense for 2024. 2. For each independent case, determine the net loss-AOCI or net gain-AOCI as of January 1, 2025.
