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.
-
Formulate the transportation problem in Problem 9-11 as a linear program and solve using computersoftware. NEW WAREHOUSE REQUIREMENTS NEW FACTORY CAPACITIES Albuquerque (A) Boston (B) Cleveland (C)...
-
A financial firm holds a bond in its investment portfolio whose duration is 15 years. Its current market price is $975. While market interest rates are currently at 6 percent for comparable quality...
-
938 Find the prime factorization of the given number.
-
Santo Design Agency was founded by Thomas Grant in January 2004. Presented below is the adjusted trial balance as of December 31, 2008. Instructions (a) Prepare an income statement and a statement of...
-
From the figures mentioned below of Umbrella Corp, calculate the Weighted Average Cost of Capital (WACC). ?. From the figures mentioned below of Umbrella Corp, calculate the Weighted Average Cost...
-
Ruth Dennis, CEO of Prescott Industries, is concerned about the recent volatility in the company's operating income. She believes that since the number of units sold has been fairly stable over the...
-
Sergio filed a tax return that later the IRS determined had an underpayment of tax due to fraud. What is the penalty for fraud? 20% of the underpayment attributable to fraud. 75% of the underpayment...
-
Let F(x, y, z) = (x cos^2 y)i + (yx)j + (z sin^2 y)k be a vector field on R3 . Let f : R3 R be a function defined by f(x, y, z) = e^x + z^3 cos (xy). (a) Find the gradient of f. (b) Find the...
-
Provide an example of how an international company of your choice (for example, Unilever or Mondelez, but you can select any international company you would like) changes its distribution channels...
-
Recommendations you would suggest to the company (progressive insurance) based on your review of their marketing strategy Strengths: Things they do well (minimum 3) Ideas for Improvement (minimum 3)...
-
Starting in July of 2020, Monail Beauty Salon plans to launch a State of the art, 942 sq. ft. Nail Spa and Salon in North Vancouver to cater to clients...
-
How can an addictions counselors briefly build empathy by putting in their marketing profile with inviting the potential client to reach out to them?
-
t FRQ A newly turned 50 year old caucasian male named Steven had a severe traumatic brain injury after a construction site accident in which he fell on the back of his head because of the lack of his...
-
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...
-
Determine if \(\frac{8}{14}\) and \(\frac{12}{26}\) are equivalent fractions.
-
Correctly apply the rules for the order of operations to accurately compute the following: \((8-6)^{2} \times 100-\left((48 / 6-3)^{2}-4 \times 7 ight)\).
-
Determine if the following are perfect squares: 1. 94 2. 441
Study smarter with the SolutionInn App