Pharoah Corp., a company whose stock is publicly traded, provides a noncontributory defined-benefit pension plan for its employees. The company's actuary has provided the following information for the year ended December 31, 2021:Projected benefit obligation $766000Accumulated benefit obligation 577000Fair value of plan assets 900000Service cost 260000Interest on projected benefit obligation 28000Amortization of prior service cost 68000Expected and actual return on plan assets 94500The market-related asset value equals the fair value of plan assets. No contributions have been made for 2021 pension cost. In its December 31, 2021 balance sheet, Pharoah should report a pension asset / liability of Pension asset of $134000 Pension asset of $900000 Pension liability of $766000 Pension liability of $577000

The net benefit obligation/Assets are the difference between the employee benefit obligation and plan assets. The employee’s current cost, past cost, and interest on employees benefit obligation increases the amount of employee benefit obligation. The contribution and interest in plan assets increase the value of plan assets.The net plan assets are as follows: Resultant table: Hence, the pension asset of $134,000 is correct.

Answered: Pharoah Corp., a company whose stock is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Pharoah Corp., a company whose stock is publicly traded, provides a noncontributory defined-benefit pension plan for its employees. The company's actuary has provided the following information for the year ended December 31, 2021:

Projected benefit obligation	$	766000
Accumulated benefit obligation		577000
Fair value of plan assets		900000
Service cost		260000
Interest on projected benefit obligation		28000
Amortization of prior service cost		68000
Expected and actual return on plan assets		94500

The market-related asset value equals the fair value of plan assets. No contributions have been made for 2021 pension cost. In its December 31, 2021 balance sheet, Pharoah should report a pension asset / liability of

Pension asset of $134000

Pension asset of $900000

Pension liability of $766000

Pension liability of $577000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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