The following information pertains to a company's defined benefit plan for the year. Balance Fair value of plan assets, Jan. 1 Fair value of plan assets, Dec. 31 Projected benefit obligation, Jan. 1 Net pension asset (liability), Dec. 31 Activity for the Year Actual return on plan assets $300 Contributions to plan assets 450 Service cost 500 Other $5,000 Dr. 5,625 Dr. 5,000 Cr. 200 Cr. Discount rate 896 Expected rate of return on plan assets 796

The following information pertains to a company's defined benefit plan for the year. Balance Fair value of plan assets, Jan. 1 Fair value of plan assets, Dec. 31 Projected benefit obligation, Jan. 1 Net pension asset (liability), Dec. 31 Activity for the Year Actual return on plan assets $300 Contributions to plan assets 450 Service cost 500 Other $5,000 Dr. 5,625 Dr. 5,000 Cr. 200 Cr. Discount rate 896 Expected rate of return on plan assets 796

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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Concept explainers

Employee Benefits

In an organization employees are the most important resource and most important asset. They can lead an organization to the sky or can be the reason for unsuccessful of business. Therefore, it is very much important that employees of an organization should be satisfied by the environment of the organization and most importantly with the salary, wages incentives, etc.

Question

Analyzing Changes in Plan Assets and PBO
The following information pertains to a company's defined benefit plan for the year.
Balance
Fair value of plan assets, Jan. 1
Fair value of plan assets, Dec. 31
Projected benefit obligation, Jan. 1
Net pension asset (liability), Dec. 31
Activity for the Year
Actual return on plan assets $300
Contributions to plan assets 450
Service cost
500
$ 400
Discount rate
8%
Expected rate of return on plan assets 7%
Required
a. Calculate benefits paid to retirees during the year.
Note: Do not use a negative sign with your answer.
Other
$
Check
X
b. Calculate any actuarial gain or loss on the PBO for the year.
Note: Use a negative sign to indicate a loss.
$5,000 Dr.
5,625 Dr.
5,000 Cr.
200 Cr.
x

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