The initial amount to be recognized on the books of Arrieta for initial recognition of the...
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The initial amount to be recognized on the books of Arrieta for initial recognition of the funded status of the Sales pension plan is: Benefit obligation Fair value of plan assets Funded status 12/31/2010 Year 1 On July 1, 2011 Arrieta amends the plan to align the benefits with its own plans, retroactive to the date of employment for the acquired employees. The retroactive benefits result in a prior service cost. The remaining service lives of those employees (average time to retirement) is 12 years. The actuary presents you with the following information as of 12/31/2011 Service cost Interest cost Expected return on plan assets Actuarial gain/(loss) Plan amendment Actual return on plan assets Benefits paid Employer contributions 2,700 2,600 (100) Discount rate Expected return Salary increases 100 105 182 20 360 150 (75) 35 1/1/2011 12/31/2011 3.75% 7.00% 4.00% 4.00% 7.00% 4.00% Required (18 pts): a) Prepare the disclosure for the change in plan obligation and the change in plan assets for the year and determine the ending funded status. b) Prepare the disclosure for the net period benefit cost for the period. c) Describe how you will account for prior service costs (i.e. which accounts will be affected on the balance sheet and income statement and by how much). Provide ASC references to support the accounting for the prior service cost. d) Determine the amount of any amortization of gains and losses for the following year. Provide ASC references to support the calculation. The initial amount to be recognized on the books of Arrieta for initial recognition of the funded status of the Sales pension plan is: Benefit obligation Fair value of plan assets Funded status 12/31/2010 Year 1 On July 1, 2011 Arrieta amends the plan to align the benefits with its own plans, retroactive to the date of employment for the acquired employees. The retroactive benefits result in a prior service cost. The remaining service lives of those employees (average time to retirement) is 12 years. The actuary presents you with the following information as of 12/31/2011 Service cost Interest cost Expected return on plan assets Actuarial gain/(loss) Plan amendment Actual return on plan assets Benefits paid Employer contributions 2,700 2,600 (100) Discount rate Expected return Salary increases 100 105 182 20 360 150 (75) 35 1/1/2011 12/31/2011 3.75% 7.00% 4.00% 4.00% 7.00% 4.00% Required (18 pts): a) Prepare the disclosure for the change in plan obligation and the change in plan assets for the year and determine the ending funded status. b) Prepare the disclosure for the net period benefit cost for the period. c) Describe how you will account for prior service costs (i.e. which accounts will be affected on the balance sheet and income statement and by how much). Provide ASC references to support the accounting for the prior service cost. d) Determine the amount of any amortization of gains and losses for the following year. Provide ASC references to support the calculation.
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SOLUTION Prepare the disclosure for the change in plan obligation and the change in plan assets for the year and determine the ending funded status 112011 12312011 Benefit obligation 2700 3270 Service ... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
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