Sunland Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2025. company which administers the pension plan provided the following selected information for the years 2025, 2026, and 2027. For Year Ended December 31, 2025 2026 2027 Plan assets (fair value) Accumulated benefit obligation Projected benefit obligation Net (gain) loss (for purposes of corridor calculation) $50,000 $84,900 $180,690 45,400 163,500 294,700 60,000 200,300 321,900 -0- 78,900 85,600 Employer's funding contribution (made at end of year) 50,000 60,000 105,900 There were no balances as of January 1, 2025, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the company's pension obligation was 13% in 2025, 11% in 2026, and 8% in 2027. The service cost component of net periodic pension expense amounted to the following: 2025, $60,000; 2026, $84,900; and 2027, $114,500. The average remaining service life per employee is 12 years. No benefits were paid in 2025, $30,100 of benefits were paid in 2026, and $18,600 of benefits were paid in 2027 (all benefits paid at end of year).
Sunland Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2025. company which administers the pension plan provided the following selected information for the years 2025, 2026, and 2027. For Year Ended December 31, 2025 2026 2027 Plan assets (fair value) Accumulated benefit obligation Projected benefit obligation Net (gain) loss (for purposes of corridor calculation) $50,000 $84,900 $180,690 45,400 163,500 294,700 60,000 200,300 321,900 -0- 78,900 85,600 Employer's funding contribution (made at end of year) 50,000 60,000 105,900 There were no balances as of January 1, 2025, when the plan was initiated. The actual and expected return on plan assets was 10% over the 3-year period, but the settlement rate used to discount the company's pension obligation was 13% in 2025, 11% in 2026, and 8% in 2027. The service cost component of net periodic pension expense amounted to the following: 2025, $60,000; 2026, $84,900; and 2027, $114,500. The average remaining service life per employee is 12 years. No benefits were paid in 2025, $30,100 of benefits were paid in 2026, and $18,600 of benefits were paid in 2027 (all benefits paid at end of year).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sunland Toothpaste Company initiates a defined benefit pension plan for its 50 employees on January 1, 2025.
company which administers the pension plan provided the following selected information for the years 2025, 2026, and 2027.
For Year Ended December 31,
2025
2026
2027
Plan assets (fair value)
Accumulated benefit obligation
Projected benefit obligation
Net (gain) loss (for purposes of corridor calculation)
$50,000
$84,900 $180,690
45,400
163,500
294,700
60,000
200,300
321,900
-0-
78,900
85,600
Employer's funding contribution (made at end of year)
50,000
60,000
105,900
There were no balances as of January 1, 2025, when the plan was initiated. The actual and expected return on plan assets was 10%
over the 3-year period, but the settlement rate used to discount the company's pension obligation was 13% in 2025, 11% in 2026, and
8% in 2027. The service cost component of net periodic pension expense amounted to the following: 2025, $60,000; 2026, $84,900;
and 2027, $114,500. The average remaining service life per employee is 12 years. No benefits were paid in 2025, $30,100 of benefits
were paid in 2026, and $18,600 of benefits were paid in 2027 (all benefits paid at end of year).
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