Oregon Company's employees are eligible for retirement with benefits at the end of the year in which both age 60 is attained and they have completed 35 years of service. The benefits provide 15 years' rimbursementfor health care services of $21,000 annually, beginning one year from the date of retirementRalph Young was hired at the beginning of 1988 by Oregon after turning age 22 and is expected to retire at the end of 2026 (age 60)The discount rate is 3%. The plan is unfunded.The PV of an ordinary annuity of $1 where n-15 and/-3% is 1193794The PV of $1 where n-2 and/-3% is 094260With respect to Ralph, what is Oregon's expected postretirement beneft obligation (EPBO) et the end of 2024, rounded to the nearest dolar?Muple ChoiceOOO$122.195$236,307$601764.400

The Post Retirement Benefit Obligation (PRBO) is a financial term that represents the present value…

Answered: Oregon Company's employees are eligible…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Pearsall Company has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PBO report from the actuary. The following information was included in the report: ending PBO, $112,000; benefits paid to retirees, $11,500; interest cost, $6,500. The discount rate applied by the actuary was 10%. What was the service cost for the year? Multiple Choice $52,000. $5,000. $94,000. $18,000. There is no correct answer.
Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live. Life expectancy for each employee is 14 years beyond retirement. Their names, the amount of their annual pension payments, and the date they will receive their first payment are shown below: Employee Tinkers Evers Annual Payment $ 27,000 Date of First Payment 12/31/2027 32,000 37,000 12/31/2028 12/31/2029 Chance Required: 1. Compute the present value of the pension obligation to these three employees as of December 31, 2024. Assume an 11% interest rate. 2. The company wants to have enough cash invested at December 31, 2027, to provide for all three employees. To accumulate enough cash, they will make three equal annual contributions to a fund that will earn 11% interest compounded annually. The first contribution will be made on December 31, 2024. Compute the amount of this required annual…
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5 % x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $98,000 at the end of 2024 and the company's actuary projects her salary to be $320,000 at retirement. The actuary's discount rate is 8%. At the beginning of 2025, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 9% is the appropriate rate. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2025 with respect to Davenport. Note: Do not round intermediate calculations. Round your final answer to…
Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.6% × Service years × Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. • Mills is expected to retire at the end of 2049 after 45 years of service. • His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $84,000. • The company's actuary projects Mills's salary to be $310,000 at retirement. The actuary's discount rate is 6%. For all requirements, round final answers to the nearest whole dollars. Do not round intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement in lieu of annuity payments. Determine…
Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 12 years of service and reach age 62 while in service. On January 1, 2016, the following plan-related data were available: ($ in millions) Accumulated postretirement benefit obligation $130 Fair value of plan assets none Average remaining service period to retirement 25 years (same in previous 10 yrs.) Average remaining service period to full eligibility 20 years (same in previous 10 yrs.) On January 1, 2016, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $20 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2016 is $34 million. The interest rate is 8%. Required: 1. Calculate the postretirement benefit expense for 2016. 2. Prepare the journal entry to record the…
A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2019, the pension formula was amended, creating a prior service cost of $160,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year as well as the previous two years. Required:Fill in the missing amounts. (Enter your answers in thousands rounded to 1 decimal place.) Prior Net Pension Plan Service Net Loss Pension (Liability) ($ in thousands) PBO Assets Cost – AOCI – AOCI Expense Cash / Asset Balance, Jan. 1, 2021 $(920.0) $660.0 $152.0 $92.0 $(260.0) Service cost 112.0 Interest cost, 5% (46.0) Expected return on assets (52.8) Adjust for: Loss on assets 20.0…
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.
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% x service years x final year's salary. payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $84,000 at the end of 2024 and the company's actuary projects her salary to be $250,000 at retirement. The actuary's discount rate is 6%. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 2. Estimate by the projected benefits approach the amount of Davenport's annual retirement payments earned as of the end of 2024. 3. What is the company's projected benefit obligation at the end of 2024 with respect to Davenport? Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar. 4. If no estimates are changed in…
Vander Co. provides medical care and insurance benefits to its retirees. In the current year, Vander agrees to pay $9,500 for medical insurance and contribute an additional 5% of the employees’ $200,000 gross salaries to a retirement program. (1) Record the entry for these accrued (but unpaid) benefits on December 31. (2) Assuming $5,000 of the retirement benefits are not to be paid for five years, how should this amount be reported on the current balance sheet?
Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.5% × Service years Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. Mills is expected to retire at the end of 2049 after 45 years of service. His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $94,000. The company's actuary projects Mills's salary to be $410,000 at retirement. The actuary's discount rate is 6% For all requirements, round final answers to the nearest whole dollars. Do not round Intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement In lieu of annuity payments. Determine the…

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS