PROBLEM 3-8 Predicting Pension Expense The weighted-average discount rate used in determining General Energy Co's actuarial present value of its pension obligation is 8.5%, and the assumed rate of increase in future compensation is 7.5%. The expected long-term rate of return on its plan assets is 11.5%. Its pension obligation at the end of Year 6 is $2,212,000, and its accumulated benefit obligation is $479,000. Fair value of its assets is $3,238,000. The service cost for Year 6 is $586,000. CHECK Required: Predicted expense, Predict General Energy Co.s Year 7 net periodic pension expense given a 10% growth in service cost, the amortization of deferred loss over 30 years, and no change in the other assumed rates. Show calculations. $463 mil.
PROBLEM 3-8 Predicting Pension Expense The weighted-average discount rate used in determining General Energy Co's actuarial present value of its pension obligation is 8.5%, and the assumed rate of increase in future compensation is 7.5%. The expected long-term rate of return on its plan assets is 11.5%. Its pension obligation at the end of Year 6 is $2,212,000, and its accumulated benefit obligation is $479,000. Fair value of its assets is $3,238,000. The service cost for Year 6 is $586,000. CHECK Required: Predicted expense, Predict General Energy Co.s Year 7 net periodic pension expense given a 10% growth in service cost, the amortization of deferred loss over 30 years, and no change in the other assumed rates. Show calculations. $463 mil.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![PROBLEM 3–88
The weighted-average discount rate used in determining General Energy Co's actuarial present
value of its pension obligation is 8.5%, and the assumed rate of increase in future compensation is
7.5%. The expected long-term rate of return on its plan assets is 11.5%. Its pension obligation at
the end of Year 6 is $2,212,000, and its accumulated benefit obligation is $479,000. Fair value of
its assets is $3,238,000. The service cost for Year 6 is $586,000.
Predicting Pension
Еxpense
CHЕCK
Predicted expense,
$463 mil.
Required:
Predict General Energy Co's Year 7 net periodic pension expense given a 10% growth in service
cost, the amortization of deferred loss over 30 years, and no change in the other assumed rates.
Show calculations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcaf16098-cd21-41ba-b430-b3a56f2bbaca%2F318ced0b-1439-4bdb-9b27-9065cd84bdfe%2Fz3bn2g8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PROBLEM 3–88
The weighted-average discount rate used in determining General Energy Co's actuarial present
value of its pension obligation is 8.5%, and the assumed rate of increase in future compensation is
7.5%. The expected long-term rate of return on its plan assets is 11.5%. Its pension obligation at
the end of Year 6 is $2,212,000, and its accumulated benefit obligation is $479,000. Fair value of
its assets is $3,238,000. The service cost for Year 6 is $586,000.
Predicting Pension
Еxpense
CHЕCK
Predicted expense,
$463 mil.
Required:
Predict General Energy Co's Year 7 net periodic pension expense given a 10% growth in service
cost, the amortization of deferred loss over 30 years, and no change in the other assumed rates.
Show calculations.
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