Projected benefit obligation (PBO) : This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels. To Compute: The PBO for the year December 31, 2018.

Question

Problem 17-6 (Static) Determine the PBO; plan assets; pension expense; two years [LO17-3, 17-4, 17-6] Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2021. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. The actual return was also 10% in 2021 and 2022.* A consulting firm, engaged as actuary, recommends 6% as the appropriate discount rate. The service cost is $150,000 for 2021 and $200,000 for 2022. Year-end funding is $160,000 for 2021 and $170,000 for 2022. No assumptions or estimates were revised during 2021. * We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that, since the estimate didn't change, that also was the actual rate in 2022. Required: Calculate each of the following amounts as of both December 31, 2021, and December 31, 2022: (Enter your answers In…

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

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Problem 17-6 (Static) Determine the PBO; plan assets; pension expense; two years [LO17-3, 17-4, 17-6] Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2021. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. The actual return was also 10% in 2021 and 2022.* A consulting firm, engaged as actuary, recommends 6% as the appropriate discount rate. The service cost is $150,000 for 2021 and $200,000 for 2022. Year-end funding is $160,000 for 2021 and $170,000 for 2022. No assumptions or estimates were revised during 2021. * We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that, since the estimate didn't change, that also was the actual rate in 2022. Required: Calculate each of the following amounts as of both December 31, 2021, and December 31, 2022: (Enter your answers In…

Problem 17-6 (Static) Determine the PBO; plan assets; pension expense; two years [LO17-3, 17-4, 17-6] Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2021. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. The actual return was also 10% in 2021 and 2022.* A consulting firm, engaged as actuary, recommends 6% as the appropriate discount rate. The service cost is $150,000 for 2021 and $200,000 for 2022. Year-end funding is $160,000 for 2021 and $170,000 for 2022. No assumptions or estimates were revised during 2021. * We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that, since the estimate didn't change, that also was the actual rate in 2022. Required: Calculate each of the following amounts as of both December 31, 2021, and December 31, 2022: (Enter your answers in…

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Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

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Answer 5

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

Answer 6

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

Answer 7

Chapter 17, Problem 17.6P

1.

To determine

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

Answer 8

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

Answer 9

2.

To determine

Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a pension fund by the trustee, to invest the employer contributions, accumulate the earnings on investments, and pay the contributions plus earnings to the retired employees, are referred to as plan assets.

To Compute: The plan assets for the year December 31, 2018.

Answer 10

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

Answer 11

3.

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

To Compute: The pension expense for the year December 31, 2018.

Answer 12

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

Answer 13

4.

To determine

Net pension (liability) or asset: It is the financial item which is recorded in the balance sheet when the postretirement benefit obligation (PBO) exceeds the plan assets. If plan assets exceed PBO, net pension assets arise.

To Compute: The net pension (liability) or asset for the year December 31, 2018.

Answer 14

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Ch. 17 - Prob. 17.1Q Ch. 17 - Prob. 17.2Q Ch. 17 - Prob. 17.3Q Ch. 17 - What is the vested benefit obligation?Ch. 17 - Prob. 17.5Q Ch. 17 - Prob. 17.6Q Ch. 17 - Name three events that might change the balance of...Ch. 17 - Prob. 17.8Q Ch. 17 - Prob. 17.9Q Ch. 17 - Prob. 17.10Q

Projected benefit obligation (PBO) : This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels. To Compute: The PBO for the year December 31, 2018.

Solution Summary: The author explains the projected benefit obligation, which is the estimated present value of future retirement benefits based on the future compensation levels.

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.

Chapter 17 Solutions

Projected benefit obligation (PBO) : This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels. To Compute: The PBO for the year December 31, 2018.

Solution Summary: The author explains the projected benefit obligation, which is the estimated present value of future retirement benefits based on the future compensation levels.

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels. To Compute: The PBO for the year December 31, 2018.

Chapter 17 Solutions

Projected benefit obligation (PBO): This is the estimated present value of future retirement benefits, accumulated based on the future compensation levels.

To Compute: The PBO for the year December 31, 2018.