Exam 17: Pensions and Other Employee Future Benefits

Dunder Mae Products has a defined contribution pension plan for its employees.The plan requires the company to contribute 8% of these employees' salaries to the pension.In 2013,total salary for employees covered by the pension plan totalled $70 million,of which 85% is attributable to employees involved in manufacturing while the remaining 15% of salaries relate to administrative staff.The company contributed $3 million to the pension during the year. Requirement: Provide the summary journal entry for Dunder Mae's pension plan for 2013.

Gander Products has a defined contribution pension plan for its employees.The plan requires the company to contribute 6% of these employees' salaries to the pension.In 2013,total salary for employees covered by the pension plan totalled $40 million,of which 75% is attributable to employees involved in manufacturing while the remaining 25% of salaries relate to administrative staff.The company contributed $500,000 to the pension during the year. Requirement: Provide the summary journal entry for Gander's pension plan for 2013.

Humming Furnishings produces quality household furniture.The company has only one defined benefit pension plan,which covers its 30 carpenters.The company has completed its accounting for the year and closed its books.The draft financial statements show a defined benefit liability of $90,000.Your review of the company's records shows that the pension plan has a deficit of $250,000.The company's working papers show that $80,000 of actuarial losses remain unamortized at year-end,and $16,000 of past service cost was amortized during the year. Requirement: Determine the number of years that remain until employees are entitled to receive the additional benefits related to the past service cost.

What are actuarial losses or gains in a defined benefit plan?

What is the corridor limit for fiscal 2013? Balance at Dec 31 Fiscal 2013 Fiscal 2014 Pension assets 15,000,000 13,000,000 Pension obligation 13,200,000 13,500,000 Unamortized actuarial gains 250,000 1,300,000

Katherina is currently 30 years old and plans to retire later in life.She would like to have an income of $35,000 per year during her retirement,which she anticipates will last for another 25 years.Assume that she receives the retirement income at the end of each of the 25 years. Required: Determine the amount of money Katherina will need to have accumulated by the time she starts her retirement.Assume a discount rate of 5%.

Orion Steel provides a defined benefit pension plan for its employees.One of its employees,Gail Camden,who just turned 45 years old,expects to retire at age 70.At that time,the pension plan will pay Gail annual pension payments equal to 5% of her final year's salary for each year of services rendered by Gail.The pension payments will continue until Gail's death,which actuaries expect to be when she turns 95 years old.Gail is currently earning $35,000 per year,and this rate is not expected to increase due to the poor state of the steel industry.Orion Steel uses an 8 % interest rate for its pension obligations. Requirement: Determine the current service cost for Gail Camden's pension for the past year (the year just before she turned 45).

What amount is included in the pension reconciliation for the income statement?

Which of the following best describes a "defined contribution plan"?

What is the pension expense for the following plan after 10 years? "The company must contribute $100/year for each of its 500 employees.The plan hopes to accumulate enough funds so that retirees receive $10,000 in the future; the plan does not guarantee the investment returns to the employees."

Which of the following component refers to the benefits earned by employees in a defined benefit plan?

A company has a defined benefit pension liability of $3,750,000 at the end of the year.The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000. Requirement: Determine the value of the defined benefit pension liability at the beginning of the year.

Humid Furnishings produces quality household furniture.The company has only one defined benefit pension plan,which covers its 30 carpenters.The company has completed its accounting for the year and closed its books.The draft financial statements show a defined benefit asset of $90,000.Your review of the company's records shows that the pension plan has a deficit of $50,000.The company's working papers show that $80,000 of actuarial losses remain unamortized at year-end,and $16,000 of past service cost was amortized during the year. Requirement: Determine the number of years that remain until employees are entitled to receive the additional benefits related to the past service cost.

Which is not a component of pension expense under IFRS?

What is the corridor limit for fiscal 2014? Balance at Dec 31 Fiscal 2013 Fiscal 2014 Pension assets 5,000,000 3,000,000 Pension obligation 3,200,000 3,500,000 Unamortized actuarial gains 210,000 300,000

A company has a defined benefit pension asset of $1,050,000 at the end of the year.The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Requirement: Determine the value of the defined benefit pension liability at the beginning of the year.

Odakota Canoes has had a defined benefit pension plan for three decades.Two years ago,the company improved the benefits at a cost of $1,000,000.These benefits vest to employees five years after the plan amendment.At the beginning of the current year,the company had unamortized actuarial gains of $10,400,000.Pension plan assets were $95,200,000 while pension obligations were $93,200,000 at the beginning of the year. For the current year,Odakota's pension plan incurred current service cost of $6,100,000 and interest of $7,456,000.The pension's assets earned $7,316,000,which is $300,000 below expectations.The expected average remaining service lives (EARSL)of current employees is 8 years. Requirement: Compute the pension expense assuming Odakota treats unamortized actuarial gains and losses either (i)using the corridor approach or (ii)flowing the gains and losses through other comprehensive income (OCI).

Which statement best explains the "corridor limit"?

Explain the accounting for defined contribution plans and also discuss why it is straight-forward.

Current service cost for a defined benefit pension plan amounted to $8,800,000.This pension plan's assets generated $6,500,000 of income,which exceeded expectations by $500,000.Pension obligations incurred interest cost of $5,000,000,which were above expectations by $280,000.Amortizations during the year included $600,000 for past service cost and $67,000 of corridor amortization relating to actuarial gains. Requirement: Compute the amount of pension expense for the year.