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Rachel Company has established a defined benefit pension plan for its employees. Annual payments under the pension plan are equal to 3% of an employee’s highest lifetime salary multiplied by the number of years with the entity. An employee’s salary in 2021 was P300,000. The employee is expected to retire in 10 years and the salary increases are expected to average 4% per year during that period. On December 31, 2021, the employee has worked for 12 years. The appropriate discount rate is 10% and the employee is expected to live for 5 years after retirement.
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- Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.6% × Service years × Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. • Mills is expected to retire at the end of 2049 after 45 years of service. • His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $84,000. • The company's actuary projects Mills's salary to be $310,000 at retirement. The actuary's discount rate is 6%. For all requirements, round final answers to the nearest whole dollars. Do not round intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement in lieu of annuity payments. Determine…Sheridan Ltd. initiated a one-person pension plan in January 2015 that promises the employee a pension on retirement according to the following formula: pension benefit = 2.6% of final salary per year of service after the plan initiation. The employee began employment with Sheridan early in 2015 at age 33 and expects to retire at the end of 2041, the year in which he turns 60. His life expectancy at that time is 21 years. Assume that this employee earned an annual salary of $49,000 when he joined Sheridan, that his salary was expected to increase at a rate of 4% per year, and that this remains a reasonable assumption to date. Sheridan considers a discount rate of 8% to be appropriate. (a) × Your answer is incorrect. What is the employee's expected final salary? (Round your answer to O decimal places, e.g. 5,275.) Expected final salary $ 108442On January 1, 2020, Carla Vista Incorporated amended its pension plan which caused an increase of $5,460,150 in its projected benefit obligation. The company has 445 employees who are expected to receive benefits under the company's defined-benefit pension plan. The personnel department provided the following information regarding expected employee retirements: Number ofEmployees Expected RetirementsOn December 31 49 2020 129 2021 69 2022 169 2023 29 2024 445 The company plans to use the years-of-service method in calculating the amortization of prior service cost as a component of pension expense.Prepare a schedule which shows the amount of annual prior service cost amortization that the company will recognize as a component of pension expense from 2020 through 2024.
- Ivanhoe, Inc. has a defined-benefit pension plan covering its 50 employees. Ivanhoe agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2790000. Ivanhoe determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 10 employees are expected to retire or quit each year. Assuming that Ivanhoe uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is $558000. O $651000. $930000. O $186000.Lewis Industries adopted a defined benefit pension plan on January 1, 2021. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2021. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2021—is fully funded at the end of each year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actual rate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retired during 2021.Required:Determine each of the following amounts as of December 31, 2021, the fiscal year-end for Lewis:1. Projected benefit obligation.2. Plan assets.3. Pension expense.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 2019, the pension formula was amended, creating a prior service cost of $160,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year as well as the previous two years. Required:Fill in the missing amounts. (Enter your answers in thousands rounded to 1 decimal place.) Prior Net Pension Plan Service Net Loss Pension (Liability) ($ in thousands) PBO Assets Cost – AOCI – AOCI Expense Cash / Asset Balance, Jan. 1, 2021 $(920.0) $660.0 $152.0 $92.0 $(260.0) Service cost 112.0 Interest cost, 5% (46.0) Expected return on assets (52.8) Adjust for: Loss on assets 20.0…
- Frazier Refrigeration amended its defined benefit pension plan on December 31, 2018, to increase retirement benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making theamendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at therate 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 ineach of the next 10 years.2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expensein each of the next 10 years.Carla Vista, Inc. on January 1, 2021 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 109 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 109 employees who are expected to receive benefits under the plan is 1,308. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2021 was $5,628,000. On December 31, 2021 the following information was provided concerning the pension plan's operations for its first year. Employer's contribution at end of year Service cost Projected benefit obligation Plan assets (at fair value) Expected return on plan assets Settlement rate (a) $1,690,000 Pension expense 690,000 6,606,600 1,690,000 gas 8% Compute the pension expense recognized in 2021. Assume the prior service cost is amortized over the average remaining service life of the employees.arasota Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Employee Future Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $74,880.Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules. Year Annual Amortization 2020 $enter a dollar amount 2021 enter a dollar amount 2022 enter a dollar amount 2023 enter a dollar amount 2024 enter a dollar amount 2025 enter a dollar amount
- On December 31, 2019, Berry Company determined that the 2019 service cost on its defined benefit pension plan was $140,000. At the beginning of 2019, Berry had pension plan assets of $510,000 and a projected benefit obligation of $700,000. Its discount rate (and expected long-term rate of return on plan assets) for 2019 was 10%. There are no other components of Berry's pension expense; the company had an accrued/prepaid pension cost liability at the end of 2018. Required: 1. Compute the amount of Berry's pension expense for 2019. 2. Prepare the journal entry to record Berry's 2019 pension expense if it funds the pension plan in the amount of (a) $159,000 and (b) $140,000.) Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Future Employee Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $72,000. Instructions Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules.Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.5% × Service years Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. Mills is expected to retire at the end of 2049 after 45 years of service. His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $94,000. The company's actuary projects Mills's salary to be $410,000 at retirement. The actuary's discount rate is 6% For all requirements, round final answers to the nearest whole dollars. Do not round Intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement In lieu of annuity payments. Determine the…
