Pendulum Enterprises has a defined benefit plan. Employees receive a pension equal to 2% of the averageof the highest 5 years of salary and based on years of service. On December 31 2020, the fair value of thepension assets in the plan is $10.7 M, although pension contributions were in excess of $12.5 M, and theestimated pension obligation is $12.3M.Mary-Lou is considering retirement but wants to know how much she is entitled toreceive under this defined benefit plan. Her 5 years highest average earnings are$67,500 and she has 30 years of service. What is her annual pension benefit? (placevalue without a $ sign in the space below)A

Part 1: Answer: Mary-Lou's annual pension benefit is $33,750.Explanation:Part 2: Explanation:Step 1:…

Answered: Pendulum Enterprises has a defined…

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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On January 1, 2019, Smith Company adopted a defined benefit pension plan. At that time, Smith awarded retroactive benefits to its employees, resulting in a prior service cost that created a projected benefit obligation of $1,250,000 on that date (which it did not fund). Smith decided to amortize the prior service cost by the straight-line method over the 20-year average remaining service life of its active participating employees. Smith’s actuary has also provided the following additional information for 2019 and 2020: (1) service cost: 2019, $145,000; 2020, $152,000; (2) expected (and actual) return on plan assets: 2020, $32,000; and (3) projected benefit obligation: 1/1/2020, $1,520,000. The discount rate was 10% in both 2019 and 2020. Smith contributed $330,000 and $350,000 to the pension fund at the end of 2019 and 2020, respectively. There are no other components of Smith’s pension expense. Required: 1. Compute the amount of Smith’s pension expense for 2019 and 2020. 2.…
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.
Classified Electronics has an unfunded retiree health care plan. Each of the company's three employees has been with the firm since its inception at the beginning of 2020. As of the end of 2021, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $66,000. Each of the employees will become full eligible for benefits after 20 more years of service but aren't expected to retire for 35 more years. The interest rate is 4%. Required: 1. What is the expected postretirement benefit obligation at the end of 2021? 2. what is the accumulated postretirement benefit obligation at the end of 2021? 3. what is the expected postretirement benefit obligation at the end of 2022? 4. What is the accumulated postretirement benefit obligation at the end of 2022? 1. Expected postretirement benefit obligation 2021 _______ 2. Accumulated postretirement benefit obligation 2021 _______ 3. Expected…
Farber Company adopted a defined benefit pension plan on January 1, 2019, at which time it awarded retroactive benefits to its employees. This prior service cost amounted to $200,000, which the company did not fund. Farber planned to amortize this prior service cost in the amount of $10,000 per year. Farber determined its pension expense (which included the prior service cost amortization) to be $75,000 for 2019, of which the company funded $74,000. At the end of 2019, the fair value of the pension plan assets was $74,000 and Farber’s projected benefit obligation was $265,000. Prepare all the journal entries related to Farber’s pension plan for 2019. Prepare all the journal entries related to Farber’s pension plan for 2019.
wifty Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,500. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $144,729 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $908,100, an accumulated benefit obligation of $802,100, and a debit balance of $400,100 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,200 at the beginning of the year. The actual and expected return on plan assets was $54,100. The settlement rate was 9%. No gains or losses occurred in 2020 and no benefits were paid. 4. Amortization of prior service cost was $50,500 in 2020. Amortization of net gain or loss was not required in 2020. (a)…
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…
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
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been with the firm since its inception at the beginning of 2020. As of the end of 2021, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $69,000. Each of the employees will become fully eligible for benefits after 21 more years of service but aren’t expected to retire for 35 more years. The interest rate is 5%. Required:1. What is the expected postretirement benefit obligation at the end of 2021?2. What is the accumulated postretirement benefit obligation at the end of 2021?3. What is the expected postretirement benefit obligation at the end of 2022?4. What is the accumulated postretirement benefit obligation at the end of 2022?
Alicia has been working for JMM Corp. for 33 years. Alicia participates in JMM's defined benefit plan. Under the plan, for every year of service for JMM she is to receive 2 percent of the average salary of her three highest years of compensation from JMM. She retired on January 1, 2018. Before retirement, her annual salary was $579,000, $609,000, and $639,000 for 2015, 2016, and 2017. What is the maximum benefit Alicia can receive in 2018? Maximum benefit in 2018
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been with the firm since its inception at the beginning of 2020. As of the end of 2021, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $84,100. Each of the employees will become fully eligible for benefits after 27 more years of service but aren’t expected to retire for 35 more years. The interest rate is 5%. Required:1. What is the expected postretirement benefit obligation at the end of 2021?2. What is the accumulated postretirement benefit obligation at the end of 2021?3. What is the expected postretirement benefit obligation at the end of 2022?4. What is the accumulated postretirement benefit obligation at the end of 2022?
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…

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