TGY has a defined contribution pension plan for its employees. The plan is trusteed, and each...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
TGY has a defined contribution pension plan for its employees. The plan is trusteed, and each year the company makes an annual contribution, matching employee contributions to the plan to a certain maximum. The funds are invested for the employees by the pension fund trustee using predetermined parameters. The pension plan was established to target roughly 70% of final pay to employees as a pension, with survivor benefits or a minimum 10- year payout. None of these targets is guaranteed. Calculations were done based on mortality assumptions and an expected 6% yield. Contributions are re-evaluated every three years. Based on these assumptions, TGY paid $375,000 to the fund in 20X7. At the end of 20X7, plan assets total $4,970,000. Required: 1. What are the employees of TGY entitled to as a result of this pension? How is this different from a defined benefit pension plan? 2. What difference would it make if the targets established above were guaranteed by the company? 3. What amount of pension expense would TGY report in 20X7? 4. If fund earnings were to be 8% in 20X8, instead of the 6% predicted, who would benefit? Explain. TGY has a defined contribution pension plan for its employees. The plan is trusteed, and each year the company makes an annual contribution, matching employee contributions to the plan to a certain maximum. The funds are invested for the employees by the pension fund trustee using predetermined parameters. The pension plan was established to target roughly 70% of final pay to employees as a pension, with survivor benefits or a minimum 10- year payout. None of these targets is guaranteed. Calculations were done based on mortality assumptions and an expected 6% yield. Contributions are re-evaluated every three years. Based on these assumptions, TGY paid $375,000 to the fund in 20X7. At the end of 20X7, plan assets total $4,970,000. Required: 1. What are the employees of TGY entitled to as a result of this pension? How is this different from a defined benefit pension plan? 2. What difference would it make if the targets established above were guaranteed by the company? 3. What amount of pension expense would TGY report in 20X7? 4. If fund earnings were to be 8% in 20X8, instead of the 6% predicted, who would benefit? Explain.
Expert Answer:
Answer rating: 100% (QA)
Answer 1 Employees of TGY are entitled to the assets in the pension fund which are invested by the pension fund trustee They are not guaranteed a spec... View the full answer
Related Book For
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
Students also viewed these accounting questions
-
Jabara Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employees gross pay for each payroll period as the employee...
-
Jabara Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee's gross pay for each payroll period as the employee...
-
Sage Corporation provides a defined contribution pension plan for its employees. Under the plan, the company deducts 6% of each employees gross pay for each bi-weekly pay period. The company also...
-
Explain the relationship between three Statement objects, and illustrate why and how the CallableStatement object can use the setXXX() methods defined in the PreparedStatement interface.
-
Did the bank have a perfected security interest in the property?
-
Draw the tetra-ethyl analog of 2,2-dimethylpropane as discussed in "A Word About . . . Isomers-Possible and Impossible" on page 55. What is the correct IUPAC name for this compound? Make models of...
-
Prepare budgeted balance sheet (Learning Objective 3) Use the following information to prepare a budgeted balance sheet for Marine.com at March 31, 2009. Show computations for the cash and owners...
-
During the year, Dorner Company produced 280,000 lathe components for industrial metal working machinery. Dorners direct materials and direct labor standards per unit are as follows: Direct materials...
-
Question V.3.39. Use the limit laws and the squeeze theorem to calculate lim, 0. an, for the following sequence (an ): (a) an = 19+ 1; ( b ) an = n ( 1 4 + : - 2 ); (c) an = (5" + 3" + 20)h; (d) an =...
-
Which series has the highest beta. BraveNewCoin Liquid Index for Bitcoin 1D BNC Trading Brave Ne Yellow Green Blue Orange
-
What is the importance for the insurance firms to write ideally insurable loss exposures? If the applicants loss exposure is not ideally insurable, what can the insurance firms do to insure it?
-
A compressed-air storage system uses excess electricity to power a compressor that fills a tank with pressurized air. The tank has a volume of 100 m and initially holds ambient air (290 K, 1 bar)....
-
Suppose you want to buy a stock with a 5 0 % initial and 3 0 % maintenance margin. The stock is worth $ 1 0 0 . a . What is the equity in your initial position? What is your leverage? b . Suppose the...
-
The total cost, in dollars, of manufacturing x calculators is given by C(x) = 10 x + 1000. a. What is the total cost of manufacturing 100 calculators? b. What is the rate of change in the total cost...
-
If P(t)= (cost, sint) has coordinates (0.994,0.11), find the coordinates of a. P(t + ) X = b. P(-t) x = c. P(t - ) X = c. P(-t-T) x = y = y = y = y = III
-
A firm purchases a new truck for $30,000. It will be depreciated over 5 years at $6,000 per year. If the tax rate is 30% what is the time 0 cash flow?
-
4 Claim 1 Example Bob uses a 20 foot ladder to pai
-
Kims Konstructions has assembled the following data for a proposed straw-reinforced brick maker (SRBM): SRBM Cost: $26,000 Life: 5 years Revenue (p.a.) $11,000 Operating Expenses (p.a.) $3,000...
-
On January 1, 2020, Osborn Inc. sold 12% bonds having a maturity value of $800,000 for $860,652, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature on...
-
The new auditor's report required under Canadian Auditing Standards highlights key audit matters. What does information on key audit matters provide to potential investors, and how do these matters...
-
Angus Farms Ltd., which follows ASPE, had the following transactions during the fiscal year ended December 31, 2020. 1. On May 1, a used tractor was sold at auction. The information concerning this...
-
Evaluate the use of property, plant, and equipment. - The efficiency with which a company uses its property, plant, and equipment can be analyzed by using the tangible capital asset turnover ratio...
-
Explain the concept and recording of asset impairment. - Impairment exists when the recoverable amount of an asset is less than the carrying value of the asset. - An impairment loss, the excess of...
-
Sanborn Corporations condensed comparative income statements for 20x8 and 20x7 appear below. The corporations condensed comparative balance sheets for 20x8 and 20x7 appear on the next page. Required...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App