Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,650,000 as of 1 January 20X7. The company will pay $204,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 Current service cost Actual return on fund assets Decrease in defined benefit obligation at year-end due to change in assumptions Payments to pensioners at end of year Required: Prepare a spreadsheet containing all 29X7 $119,000 20x8 $161,000 7,000 39,000 42,400 pension information for 20X7 and 20X8

Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,650,000 as of 1 January 20X7. The company will pay $204,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 Current service cost Actual return on fund assets Decrease in defined benefit obligation at year-end due to change in assumptions Payments to pensioners at end of year Required: Prepare a spreadsheet containing all 29X7 $119,000 20x8 $161,000 7,000 39,000 42,400 pension information for 20X7 and 20X8

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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Lewis Industries adopted a defined benefit pension plan on January 1, 2021. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2021. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2021—is fully funded at the end of each year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actual rate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retired during 2021.Required:Determine each of the following amounts as of December 31, 2021, the fiscal year-end for Lewis:1. Projected benefit obligation.2. Plan assets.3. Pension expense.
Dell Company adopted a defined benefit pension plan on January 1, 20X1. Dell amortizes the initial prior service cost of $1,334,400 over 16 years. It assumes a 7% discount rate and an 8% expected rate of return. The following additional data are available for 20X1: Service cost for 20x1 Prior service cost amortization Employer contribution made at 12/31/20X1 Required: Compute the pension asset (liability) to be reported on Dell's December 31, 20X1, balance sheet. (A net pension liability should be indicated by a minus sign.) Answer is complete but not entirely correct. $ Pension asset (liability) to be reported $320,000 83,400 335,000 1,412,808
A company's defined benefit pension plan incurs current service cost of $4,000,000. his pension plan's assets generated $2,500,000 of income, which exceeded expectations by $500,000. Pension obligations incurred interest cost of $1,500,000, which were $700,000 below expectations. During the year, the company increased benefits in the pension plan and incurred $800,000 for past service cost. What is the pension expense for the year? o A) $3,800,000 • B) $4,600,000 • C) $5,600,000 o D) $5,000,000 O 2. What are actuarial losses or gains in a defined benefit plan? • A) Difference arising between the actual and the expected value of plan contributions. o B) Expected income earned on the pension plan assets. o c) Differences arising between the actual and expected values of the obligation. o D) Plan amendments that retrospectively improve pension plan benefits.
On January 1, 20X1, East Corporation adopted a defined benefit pension plan. At plan inception, the prior service cost was $60,000. In 20X1, East incurred service cost of $150,000 and amortized $12,000 of prior service cost. On December 31, 20X1, East contributed $160,000 to the pension plan. East assumes a 6% discount rate and 5% expected rate of return. Required: At December 31, 20X1, what amounts should East report as a pension asset (liability) and AOCI on its balance sheet? (A net pension liability should be indicated with by minus sign.)
Jones Manufacturing Inc. sponsored a defined benefit pension plan effective 1 January 20X7. The company uses the projected unit credit actuarial cost method for funding and accounting. Long-term corporate bonds have a yield of 4%. Employees were granted partial credit for past service. The past service obligation has been measured at $1,685,000 as of 1 January 20X7. The company will pay $218,000 (for past service) plus all current service cost to the pension plan trustee each 31 December beginning 31 December 20X7. This funding arrangement will continue for five years and then be re-evaluated. Data for 20X7 and 20X8 Current service cost Actual return on fund assets Decrease in defined benefit obligation at year-end due to change in assumptions Payments to pensioners at end of year 20X7 $126,000 20x8 $175,000 7,700 46,000 45,900 Required: Prepare a spreadsheet containing all relevant pension Information for 20X7 and 20X8. Pension Obligation Plan Assets Pension Expense Net pension Asset…
On January 1 of the current reporting year, Coda Company's projected benefit obligation was $29.3 million. During the year, pension benefits paid by the trustee were $3.3 million. Service cost was $9.3 million. Pension plan assets earned $4.3 million as expected. At the end of the year, there was no net gain or loss and no prior service cost. The actuary's discount rate was 10%. Required:Determine the amount of the projected benefit obligation at December 31. (Enter your answers in millions rounded to 2 decimal places. Amounts to be deducted should be indicated with a minus sign.)
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.
On January 1, 2022, Woody Corporation’s projected benefit obligation was $36 million. During 2022, pension benefits paid by the trustee were $8 million. Service cost for 2022 is $16 million. Pension plan assets (at fair value) increased during 2022 by $10 million as expected. At the end of 2022, there were no pension-related other comprehensive income (OCI) accounts. The actuary’s discount rate was 10%. Required:Determine the amount of the projected benefit obligation at December 31, 2022.
Louie Company's defined benefit pension plan had a PBO of $266,000 on January 1, 2021. During 2021, pension benefits paid were $45,000. The discount rate for the plan for this year was 10%. Service cost for 2021 was $83,000. Plan assets (fair value) increased during the year by $49,000. The amount of the PBO at December 31, 2021, was: Multiple Choice $221,000. $330,600. $375,600. None of these answer choices are correct. MacBook Air 身
Lewis Industries adopted a defined benefit pension plan on January 1, 2018. By making the provisions of theplan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost wasfunded immediately by a $2 million cash payment to the fund trustee on January 2, 2018. However, the cost isto be amortized (expensed) over 10 years. The service cost—$250,000 for 2018—is fully funded at the end ofeach year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actualrate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retiredduring 2018.Required:Determine each of the following amounts as of December 31, 2018, the fiscal year-end for Lewis:1. Projected benefit obligation2. Plan assets3. Pension expense