Exam 17: Pensions and Other Employee Future Benefits

A company reported $430,000 of pension expense in its income statement.The balance sheet showed that the pension liability increased by $29,000 over the year. Requirement: How much cash was paid to the pension trustee during the period?

What amount is included in the pension reconciliation for the balance sheet?

Othello Steel provides a defined benefit pension plan for its employees.One of its employees,Ginger Philips,who just turned 45 years old,expects to retire at age 70.At that time,the pension plan will pay Ginger annual pension payments equal to 10% 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.Ginger is currently earning $75,000 per year,and this rate is not expected to increase due to the poor state of the steel industry.Orion Steel uses a 6 % interest rate for its pension obligations. Requirement: Determine the current service cost for Ginger Philips's pension for the past year (the year just before she turned 45).

What is the corridor limit for fiscal 2013? 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 1,300,000

A company's defined benefit pension plan incurs current service cost of $3,000,000.Expected income on the pension plan's assets amounted to $9,800,000,while actual income was $9,900,000.The interest on the pension obligation was $10,000,000,which matched the actuarial estimates.The pension plan has no past service costs,and unamortized actuarial gains or losses at the beginning of the year are within the corridor limit. Requirement: Compute the amount of pension expense for the year.

A company has a defined benefit pension asset of $1,050,000 at the beginning 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 year-end.

Current service cost for a defined benefit pension plan amounted to $7,800,000.This pension plan's assets generated $6,500,000 of income,which exceeded expectations by $570,000.Pension obligations incurred interest cost of $5,000,000,which were above expectations by $280,000.Amortizations during the year included $400,000 for past service cost and $57,000 of corridor amortization relating to actuarial gains. Requirement: Compute the amount of pension expense for the year.

Sally is currently 30 years old and is planning for her retirement.She would like to have an income of $55,000 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 Sally will need to have accumulated by the time she starts her retirement.Assume a discount rate of 4%.

Reagan Air Conditioning Company has three pension plans for three groups of employees: production,service,and administration.Information for the three plans is as follows: Production Service Administration Total Pension assets 7,000,000 2,000,000 2,500,000 11,500,000 Pension Obligation (7,300,000) (2,600,000) (1,800,000) (11,700,000) Net pension surplus (deficit) (300,000 (600,000) 700,000 (200,000) Defined benefit asset (liability) (280,000) 700,000 (1,200,000) (780,000) Requirement Provide an excerpt of Reagan's balance sheet showing the presentation of its pension plans.

What is an actuarial gain?

Which statement is correct for the treatment of actuarial gains under ASPE?

Peter is currently 30 years old and he plans to retire early,in 20 years' time.He would like to have an income of $50,000 per year during his retirement,which he anticipates will last for another 40 years.Assume that Peter receives the retirement income at the end of each of the 40 years. Required: Determine the amount of money Peter will need to have accumulated by the time he starts his retirement.Assume a discount rate of 9%.

Changing Assumptions Ltd.has the following details related to its defined benefit pension plan as at December 31,2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317. The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31,2019,discounted at an interest rate of 10%; i.e.,$3,200,000 / 1.10⁶ = $1,806,317. The pension has no unamortized experience gains or losses,and no past service costs at the end of 2013.Funding during 2014 was $55,000.The actual value of pension fund assets at the end of 2014 was $2,171,000.As a result of the current services received from employees,the single payment due on December 31,2019 had increased from $3,200,000 to $3,380,000. Required: a.Compute the current service cost for 2014 and the amount of the accrued benefit obligation at December 31,2014.Perform this computation for interest rates of 8%,10%,and 12%. b.Derive the pension expense for 2014 under various assumptions about the expected return and discount rate.Complete the following table: c.Briefly comment on the different amounts of pension expense in relation to the assumptions for expected return and discount rate.How does a change in the discount rate affect the accrued benefit obligation?

Masons' balance sheet shows a defined benefit asset of $740,000.Records show that there are $89,000 of past service costs and $610,000 of actuarial losses that remain unamortized. Requirement: Using the pension reconciliation required in the company's note disclosures,determine the pension plan's surplus or deficit.

A company's defined benefit pension plan incurs current service cost of $3,700,000.Expected income on the pension plan's assets amounted to $9,100,000,while actual income was $9,900,000.The interest on the pension obligation was $8,300,000,which matched the actuarial estimates.The pension plan has no past service costs,and unamortized actuarial gains or losses at the beginning of the year are within the corridor limit. Requirement: Compute the amount of pension expense for the year.

Axel Corporation has a defined benefit pension plan.At January 1,2012,the following balances exist: Accrued benefit obligation \ 2,480,000 Planassets (at market value) 1,880,000 Unamortized past service cost from. plan initiation 210,000 Unrecognized net loss from actuarial gains and losses 348,000 Interest rate on obligations 4\% For the year ended December 31,2012,the current service cost as determined by an appropriate actuarial cost method was $265,000.A change in actuarial assumptions created a gain of $16,000 in 2012.The expected return on plan assets was $65,200; however,the actual return is $63,700.The expected period of full eligibility at January 1,2012 (i.e.,the vesting period)is 10 years,while the expected average remaining service life is 20 years.Axel paid $220,700 to the pension trustee in December 2012.The company recognizes only the minimum amount of corridor amortization. Requirement: Prepare the journal entry to record pension expense for 2012.