Erickson Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan. January 1,2020 December 31,2020 Vested benefit obligation $1,500 $1,900 Accumulated benefit obligation 1,900 2,730 Projected benefit obligation 2,500 3,300 Plan assets (fair value) 1,700 2,620 Settlement rate and expected rate of return 10% Pension asset/liability $ 800 $ ? Service cost for the year 2020 400 Contributions (funding in 2020) 700 Benefits paid in 2020 200 Instructions Compute the actual return on the plan assets in 2020. Compute the amount of the other comprehensive income (G/L) as of December 31, 2020. (Assume the January 1, 2020, balance was zero.) Compute the amount of net gain or loss amortization for 2020 (corridor approach). Compute pension expense for 2020.
Erickson Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan. January 1,2020 December 31,2020 Vested benefit obligation $1,500 $1,900 Accumulated benefit obligation 1,900 2,730 Projected benefit obligation 2,500 3,300 Plan assets (fair value) 1,700 2,620 Settlement rate and expected rate of return 10% Pension asset/liability $ 800 $ ? Service cost for the year 2020 400 Contributions (funding in 2020) 700 Benefits paid in 2020 200 Instructions Compute the actual return on the plan assets in 2020. Compute the amount of the other comprehensive income (G/L) as of December 31, 2020. (Assume the January 1, 2020, balance was zero.) Compute the amount of net gain or loss amortization for 2020 (corridor approach). Compute pension expense for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Erickson Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan.
| January 1, 2020 |
December 31, 2020 |
|||
| Vested benefit obligation | $1,500 | $1,900 | ||
| Accumulated benefit obligation | 1,900 | 2,730 | ||
| Projected benefit obligation | 2,500 | 3,300 | ||
| Plan assets (fair value) | 1,700 | 2,620 | ||
| Settlement rate and expected |
10% | |||
| Pension asset/liability | $ 800 | $ ? | ||
| Service cost for the year 2020 | 400 | |||
| Contributions (funding in 2020) | 700 | |||
| Benefits paid in 2020 | 200 |
Instructions
- Compute the actual return on the plan assets in 2020.
- Compute the amount of the other comprehensive income (G/L) as of December 31, 2020. (Assume the January 1, 2020, balance was zero.)
- Compute the amount of net gain or loss amortization for 2020 (corridor approach).
- Compute pension expense for 2020.
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