On January 1, 2024, Onyeocha Climbing Academy instituted a defined benefit pension plan for its employees.The annual service cost for each year of 2024 and 2025 was $740,000. The interest rate used to determinethe projected benefit obligation is 12%. Both the actual and the expected return on plan assets are 10% forboth years. Onyeocha funded the plan in the amount of $540,000 each January 1, beginning on January 1,2024.What pension liability should Onyeocha report in its balance sheet for the year ended December 31, 2025?$321,400ExplanationPBO, January 1, 2024Service costInterest costGains/lossesRetiree paymentsPBO, December 31, 2024Service costInterest cost (12% × $740,000)Gains/lossesRetiree paymentsPBO, December 31, 2025Net pension liability: $1,568,800 - $1,247,400 = $321,400$0 Plan assets, Jan, 1, 2024740,000 Funding0 Return (10% × $540,000)00$ 740,000 Plan assets, December 31, 2024$740,000 Funding88,800 Return (10% × $1,134,000)000$540,00054,000$ 594,000540,000113,400$ 1,568,800 Plan assets, December 31, 2025 $1,247,400

Pension is defined as the fund collected from the taxpayer or employee during his term of…

On January 1, 2024, Onyeocha Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2024 and 2025 was $740,000. The interest rate used to determine the projected benefit obligation is 12%. Both the actual and the expected return on plan assets are 10% for both years. Onyeocha funded the plan in the amount of $540,000 each January 1, beginning on January 1, 2024.

On January 1, 2024, Onyeocha Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2024 and 2025 was $740,000. The interest rate used to determine the projected benefit obligation is 12%. Both the actual and the expected return on plan assets are 10% for both years. Onyeocha funded the plan in the amount of $540,000 each January 1, beginning on January 1, 2024.

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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