As of January 1, the company had the following pension-related balances: Projected benefit obligation (PBO) . .
Question:
As of January 1, the company had the following pension-related balances:
Projected benefit obligation (PBO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(15,000)
Fair value of pension fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,000
Deferred net pension (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,100)
Discount rate for the PBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8%
During the year, service cost was $1,500. The actual return on the pension fund was $700. Compute pension expense for the year and the ending balance in deferred net pension (gain)/loss assuming that
(1) The expected return on the pension fund is 10% and
(2) The expected return on the pension fund is 12%.
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen