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 of2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $84,000 at the end of 2024 and thecompany'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 of2024.3. 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 the meantime, what will be the company's projected benefit obligation at the end of 2027 (threeyears later) with respect to Davenport?Note: Do not round intermediate calculations. Round your final answer to the nearest whole dollar.2. Annual retirement payments3. Projected benefit obligation 20244. Projected benefit obligation 2027

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)

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)

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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Sachs Brands defined benefit pension plan specifies annual retirement benefits equal to: 1.6% × service years× final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginningof 2004 and is expected to retire at the end of 2038 after 35 years’ service. Her retirement is expected to span18 years. Davenport’s salary is $90,000 at the end of 2018 and the company’s actuary projects her salary to be$240,000 at retirement. The actuary’s discount rate is 7%.At the beginning of 2019, the pension formula was amended to:1.75% × Service years × Final year’s salaryThe amendment was made retroactive to apply the increased benefits to prior service years.Required:1. What is the company’s prior service cost at the beginning of 2019 with respect to Davenport after the amendment described above?2. Since the amendment occurred at the beginning of 2019, amortization of the prior service cost begins in2019. What is the prior service cost amortization that would be…
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Frazier Refrigeration amended its defined benefit pension plan on December 31, 2016, to increase retirement benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making the amendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at the rate 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 in each of the next 10 years. 2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in each of the next 10 years.
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Crane Inc. has a defined - benefit pension plan covering its 216 employees. Crane agrees to amend its pension benefits. The prior service cost associated with the amendment is $140000. The employees are grouped according to expected years of retirement, as follows: Group Number of Employees Expected Retirement on December 31 A 24 2025 B 54 2026 C 94 2027 D 44 2028 What is the service years total for the year ending December 31, 2026 and what is the overall total number of service years? Select answer from the options below 192 for 2026 and 590 overall. 54 for 2026 and 216 overall. 54 for 2026 and 590 overall. 192 for 2026 and 864 overall.
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) At the beginning of 2025, the pension formula was amended to: 1.75% * Service years x Final year's salary x The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2025 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at…
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 2022, the pension formula was amended, creating a prior service cost of $240,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year, as well as, the previous two years. Required: Fill in the missing amounts. Note: Enter your answers in thousands (I.e., 5,500 should be entered as 5.5). Enter credit amounts with a minus sign. ($ in thousands) Balance, January 1, 2024 Service cost Interest cost, 5% Expected retum on assets Adjust for. Loss on assets Amortization: Prior service cost Amortization: Net loss Gain on PBO Prior service cost Cash funding Retiree benefits Balance, December 31, 2024 PBO $ (560.0) (28.0) $ (614.0) Plan Assets S $ Prior Service Net Loss - Cost-AOCr AOCI…
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 15 years beyond retirement. Their names, the amount of their annual pension payments, and the date they will receive their first payment are shown below: Annual Employee Payment Tinkers $ 33,000 Evers Chance 38,000 43,000 Date of First Payment 12/31/2027 12/31/2028 12/31/2029 Required: 1. Compute the present value of the pension obligation to these three employees as of December 31, 2024. Assume a 9% 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 9% interest compounded annually. The first contribution will be made on December 31, 2024. Compute the amount of this required annual…
Solomon, Inc. sponsors a defined benefit pension plan for its employees. On January 2020, the following balances and additional information related to this plan are: Plan assets, January 1, 2020 $170,000 Projected Benefit Obligation, January 1, 2020 260,000 Prior Service Cost, January 1, 2020 100,000 OCI-Loss, January 1, 2020 42,000 Service Cost for 2020 45,000 Actual return on plan assets 25,000 Amortization of PSC 15,000 Contributions in 2020 85,000 Benefits paid in 2020 51,000 Settlement rate 8% Expected return on assets 28,000 Average remaining service of life of active employees 10 years . Prepare the year journal entry to record the pension expense
Bob and George Corporation has a defined benefit pension plan for one employee. Annual payments are equal to the employee’s highest lifetime salary multiplied by 2.5% multiplied by the number of years with the entity. As of December 31, 2020, the employee has been with the company for 15 years and has a salary of P1,000,000. The employee is expected to retire in 25 years while projected salary increases are in line with forecasted inflation rates of 3% annually. The employee is then expected to live for 15 years after retiring and will receive the first pension payment one year after the retirement. Discount rate is 8% and PV and FV factors are as follows: FV of 1 at 3% for 25 periods 2.094 PV of ordinary annuity of 1 at 8% for 15 periods 8.559 PV of 1 at 8% for 25 periods 0.146 1. What is the annual pension payment to be used in computing the projected benefit obligation as of December 31, 2020?2. What is the projected benefit obligation as of December 31, 2020?
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