The pension plan for the Copeland Company, a U.S. company, began Year 5 with a PBO of $1,525,000 and a
The pension plan for the Copeland Company, a U.S. company, began Year 5 with a PBO of $1,525,000 and a fair value of plan assets of $1,780,000. The following pertains to the pension plan in Year 5:
• Benefits paid to retirees total $28,000
• Contributions by Copeland to the plan total $120,000
• The discount rate used by Copeland is 4%
• The actual and expected returns on plan assets equal 5%
• A retroactive adjustment for prior periods that is implemented in Year 5 will cost the plan $35,000
• Amortization for actuarial losses totals $15,000
• Amortization of prior period costs totals $6,000
• Service cost is estimated by actuaries at $45,000
• Actuarial losses associated with increased life expectancies for employees total $12,000
• An actuarial gain related to a future payout reduction is reflected in the current period as $8,000
1. Calculate the beginning funded status.
2. Calculate the ending fair value of plan assets.
3. Calculate the ending PBO.
4. Calculate the change in funded status.
5. Calculate net periodic pension cost.