Flounder, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union,the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Eachemployee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, thecontroller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of thePersonnel Department and an actuary from an insurance company, the controller develops the following information related to thepension plan.Average length of time to retirementExpected life duration after retirementTotal pension payment expected each year after retirementfor all employees. Payment made at the end of the year.15 years11 years$811.400 per yearThe interest rate to be used is 8%.Click here to view factor tablesOn the basis of the information above, determine the present value of the pension obligation (liability). (Round factor values to 5 decimalplaces, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.)The present value of pension obligation (liability) $

In this question we will be calculating the present value of pension obligation that will be take…

Answered: Flounder, Inc. is a furniture…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Sunland Company sponsors a defined benefit plan for its 100 employees. On January 1, 2025, the company's actuary provided the following information. Accumulated other comprehensive loss (PSC) Pension plan assets (fair value and market-related asset value) Accumulated benefit obligation Projected benefit obligation $149,800 198,700 259,500 387,200 The average remaining service period for the participating employees is 10 years. All employees are expected to receive benefits under the plan. On December 31, 2025, the actuary calculated that the present value of future benefits earned for employee services rendered in the current year amounted to $49,100; the projected benefit obligation was $486,600; fair value of pension assets was $275,600; the accumulated benefit obligation amounted to $362,700. The expected return on plan assets and the discount rate on the projected benefit obligation were both 10%. The actual return on plan assets is $10,300. The company's current year's…
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How do I go about calculating pension payouts to determine a company's financial obligation? Additional info is below: Postretirement BenefitsPeyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees’ health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability
Shamrock Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances related to this plan. Plan assets (market-related value) $565,000 Projected benefit obligation 656,000 Pension asset/liability 91,000 Cr. Prior service cost 86,000 Net gain or loss (debit) 92,000 As a result of the operation of the plan during 2020, the actuary provided the following additional data for 2020. Service cost $98,000 Settlement rate, 9%; expected return rate, 10% Actual return on plan assets 50,000 Amortization of prior service cost 26,000 Contributions 126,000 Benefits paid retirees 92,000 Average remaining service life of active employees 10 years Using the preceding data, compute pension expense for Shamrock Corp. for the year 2020 by preparing a pension worksheet that shows the journal entry for pension expense. (Enter all amounts as positive.) Use the market-related…
The following information related to the Postretirement Benefits (health) for the Union Company on 12/31/2020: Expected postretirement Benefits Obligation (EPBO) $ 800,000, and the Accumulated Postretirement Benefits Obligation (APBO) is $400,000. Attribution period 20 years. Number of years employees worked to date 10 years. Interest rate 10%. Required: a. Calculate the EPBO at end of 2021. b. Calculate accumulated postretirement benefits (APBO) for 2021. c. Analyze the increase in 2021 APBO.
Frazier Refrigeration amended its defined benefit pension plan on December 31, 2018, to increase retirement benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making theamendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at therate of approximately 10 each year at the end of each of the next 10 years.Required:1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense ineach of the next 10 years.2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expensein each of the next 10 years.
Edwards Company just hired another employee - Jane. The Edwards Company provides supplemental retirement benefits to its employees realizing the insufficiency of the Social Security benefits for a comfortable retirement life. Edwards has asked you to perform the necessary computations pertaining to the retirement benefits for Jane. Jane's current salary is $40,000. Jane will be entitled to this supplementary retirement benefits after 20 years of work- the start of the 21st year. The retirement plan will last for 25 years. Per company practices. Jane will be granted with a year-end salary increase of 2% per year effective Jan. 1st of each year that she works. The amount of annual retirement benefit is going to be 45% of Jane's salary right before the start of the retirement and will be paid at the start of each year, Any invested funds for pension will earn 4% compounded annually. Click here to use Excel. Compute Jane's annual retirement benefit Example of Answer: 4000.20 Two decimal…
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.
The trustee for the Bronson Corporation defined benefit pension plan sent a report to the CEO with the following information for the fiscal year: Beginning balance of plan assets at fair value $ 1,560,000 Actual return on plan assets $ 210,000 Employer’s contribution $ 150,000 Distributions to retirees $ 75,000 Service cost $ 125,000 Interest cost $ 156,000 Loss from changes in benefits or assumptions $ 35,000 Beginning balance of the PBO $ 1,580,000 The ending balance of plan assets is: Multiple Choice $1,770,000. $1,845,000. $1,920,000. $1,955,000.
arasota Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Employee Future Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $74,880.Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules. Year Annual Amortization 2020 $enter a dollar amount 2021 enter a dollar amount 2022 enter a dollar amount 2023 enter a dollar amount 2024 enter a dollar amount 2025 enter a dollar amount
Sheridan Company has 160 employees who are expected to receive benefits under the company's defined-benefit pension plan. The total number of service-years of these employees is 1,600. The actuary for the company's pension plan calculated the following net gains and losses: For the Year EndedDecember 31 (Gain) Or Loss 2020 $600,000 2021 (514,000) 2022 950,000 Prior to 2020, there was no unrecognized net gain or loss.Information about the company's projected benefit obligation and market-related (and fair) value of plan assets follows: As of January 1 2020 2021 2022 Projected benefit obligation $2,060,000 $2,300,000 $2,900,000 Fair value of plan assets 1,640,000 2,420,000 2,510,000 Based on the above information about Sheridan Company, prepare a schedule which reflects the amount of net gain or loss to be amortized by the company as a component of pension expense for the years 2020, 2021, and 2022. The company amortizes…
(Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018. Check the below image for pension plan information. Instructions(a) Prepare a pension worksheet presenting both years 2017 and 2018 and accompanying computations and amortization of the loss (2018) using the corridor approach.(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.(c) For 2018, indicate the pension amounts reported in the financial statements.

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