Exam 7: Pensions and Other Employee Future Benefits

Saul is currently 30 years old and he plans to retire early,in 20 years' time.He would like to have an income of $60,000 per year during his retirement,which he anticipates will last for another 40 years.Assume that he receives the retirement income at the end of each of the 40 years. Required: Determine the amount of money he will need to have accumulated by the time he starts his retirement.Assume a discount rate of 5%.

In pension accounting,how are past service costs accounted for under ASPE?

Compute the pension expense and the amount of OCI for the two years with the following Pension Trustee Report and Pension Actuary Report:

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 2016,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. Required: Provide the summary journal entry for Gander's pension plan for 2016.

Use the following table to explain how a change in each of the following assumptions will impact the pension surplus and the defined benefit pension asset.For each cell fill-in whether there will be an increase,decrease,or no effect.

A pension plan promises to pay $75,000 at the end of each year of the retirement period. Required: Compute the funds required to fund this pension plan at the start of the retirement period assuming: a.discount rate of 9% and a retirement period of 30 years; or b.discount rate of 9% and a retirement period of 40 years.

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

A company has a defined benefit pension asset of $750,000 at the beginning of the year.The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Required: Determine the value of the defined benefit pension liability at year-end.

Feldman has a defined benefit pension plan.The company's balance sheet shows a defined benefit asset of $770,000 at year-end.The company's records show that the company had amended the pension plan two years ago,giving rise to $600,000 of additional benefits to employees.These additional benefits vest 10 years after the plan amendment.The balance of unamortized actuarial losses at year-end is $340,000.The pension plan has $35,000,000 of assets at market value. Required: Determine the value of the accrued benefit obligation for Feldman's pension plan.

Which statement is correct?

A company has a defined benefit pension liability of $750,000 at the beginning of the year.The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Required: Determine the value of the defined benefit pension liability at year-end.

In a recent flood some company records have been partially destroyed and it is your job to help reconstruct the missing data.For one of the company employees,Piper Jones,you have managed to gather some information regarding her pension.She currently earns $78,000 per year and expects to be paid through the company's defined benefits pension plan 7% of her final salary for each year of service.Given the state of the company,salaries are not expected to increase.You know that the pension payments should continue until her death,which actuaries expect to be when she turns 90 years old.You also know that the value of the future annuities at date of retirement should be $71,870 fulfill this commitment.Piper has just turn 55,however,you do not know her planned retirement age. Required: a.Determine Piper Jones planned retirement age assuming the company uses 5% interest rate for its pension plans. b.Determine the current service cost for Piper Jones' pension for the past year (the year just before she turned 45).

What is the total 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 each retiree receives $10,000 in the future; the plan does not guarantee the investment returns to the employees."

A company has a defined benefit pension liability 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. Required: Determine the value of the defined benefit pension liability at year-end.

Tener Company sponsors a defined contribution pension plan for its employees.The plan specifies that the company will contribute $2 for every dollar that an employee contributes to the plan.Employees are eligible to contribute up to 7% of their salary to the pension plan.During 2017,employees covered by the pension plan earned salaries totalling $42 million.Employee contributions to the pension totalled $2.1 million.Tener contributed $3 million to the plan during the year. Required: Provide the summary journal entry for Tener's pension plan for 2017.

What is the key distinction between amounts recorded through income as pension expense versus amounts recorded through OCI?

Which of the following component refers to the services provided by the employees in the current period in a defined benefit plan?

Why does IAS 19 require Recognizing changes in the fair value of pension assets and liabilities to flow through OCI and not through the income statement?

Fringe Inc.produces quality leather handbags.The company has only one defined benefit pension plan,which covers its 20 leathersmiths.The company has completed its accounting for the year and has closed its books.The draft financial statements show a defined benefit liability of $5,000,000.This net liability is the result of $30,000,000 of pension assets and $23,000,000 of pension obligations.The remainder was determined to be not recoverable. During the year,$2,400,000 was paid out to retirees.The pension assets earned $4,700,000 which was $900,000 above expectations.Current service cost was $3,500,000 and interest cost was $1,500,000.The actuaries calculated an actuarial gain of $1,600,000 for the year. Required: Prepare the two schedules that would be presented in the notes to reconcile the opening and closing balances of Fringe's pension assets and liabilities.

What is an actuarial loss?