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 5% predicted, who would benefit? Explain. A19-3Defined Contribution Plan: A market analyst was quoted as saying: Defined benefit pension plans are really dead. Within 20 years, no companies in the private sector will be offering these plans-and the public sector is just daft if they don't follow suit. Why, in the first four months of this year, I know of dozens of companies that have frozen or closed their defined benefit plans. They allow new employees access to only defined contribution plans. Many of these companies just make end-of-year grants to employees directly into their personal RRSP accounts, and allow-force-the employees to make their own investment decisions. Of course, with employees more mobile between companies and less likely to stay with one employer all their lives, it can be allractive. Some people just like to get their hands on the money! Required: 1. What factors associated with defined benefit plans have led to the trend toward defined contribution plans? 2. Evaluate the attractiveness of defined contribution plans for employees. A19-4Defined Contribution Plan: Zio Lid. established a defined contribution pension plan al the beginning of 20X9. The company will contribute 3% of each employee's salary annually. Total salaries in 20X9 were expected to be$ 7.3 million. Accordingly, Zio paid$ 219,000 into the fund. After the year-end, it was determined that actual salaries were$ 6.5 million. Interest rates are in the range of 6%. connect Required: 1 . Is pension expense$ 219,000 or a lesser number? Explain. 2. Assume instead that Zio has agreed to pay$ 165,000 into the fund in 20X9. During the year, an employee left the company, forfeiting$ 35,000 of unvested pension benefits earmarked in the pension fund. Calculate the payment to the fund and the pension expense. 3. Assume instead that Zio agreed to pay$ 150,000 to the pension trustee in 20X9 but, because of cash flow issues, paid only$ 100,000. Zio agrees to pay the shortfall at the end of 20X11. In 20X10, the company makes a scheduled$ 150,000 payment to the pension fund for normal 20X10 pension entitlements. The same annual scheduled payment is made in 2011, plus the$ 50,000 arrears from 20X9. How much is pension expense and cash paid in each of 20X9, 20X10, and 20X11