Refer to the example of HTSM Corp. in Appendix 19A and assume it is now 2010, two years after the defined pension plan was initiated. In December 2010, HTSM’s actuary provided the company with an actuarial revaluation of the plan. The actuary’s assumptions included the following changes:
Estimated final salary on retirement ....... $145,000
Current settlement/discount rate ...........7%
(a) Calculate the accrued benefit obligation (ABO) at December 31, 2010, and the amount of any actuarial gain or loss.
(b) Based on the revised assumptions at the end of the year, determine what percentage increase or decrease there would be in the ABO for:
1. a 1% increase in the discount rate.
2. a 1% decrease in the discount rate.
(c) Determine the effect of the actuarial revaluation on the plan’s funded status at December 31, 2010, and on pension expense for 2010 and for 2011.
(d) Based on the revised assumptions, recalculate the past service cost that was incurred by the company in 2012.

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