Several years ago, Lewad Company established a defined benefit pension plan for its employees. The following information
Question:
Several years ago, Lewad Company established a defined benefit pension plan for its employees. The following information is available for 2019 in regard to its pension plan: (1) discount rate, 10%; (2) service cost, $142,000; (3) plan assets (1/1), $659,000; and (4) expected return on plan assets, $65,900. There is no amortization of prior service cost, and there is no gain or loss. On December 31, 2019, Lewad contributed $143,000 to the pension plan, resulting in a credit to Accrued/Prepaid Pension Cost of $8,200.
Required:
1. Compute the amount of Lewad’s projected benefit obligation on January 1, 2019.
2. Next Level How would a decrease in the discount rate affect Lewad’s pension expense?
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Expected Return
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:
1 Cashcontribution12312019 143000 Accruedprepaid pension cost credit 8200 2019 pension expense 15...View the full answer
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
