Montoya Company has available the following information about its defined-benefi
ID: 2481447 • Letter: M
Question
Montoya Company has available the following information about its defined-benefit pension plan for the year ending December 31, 2015:
Service cost for 2015 $ 25,000
Accumulated benefit obligation 683,000
Plan assets at fair value 630,000
Accumulated OCI (PSC) 300,000
Vested benefit obligation 505,000
Market-related asset value 725,000
Projected benefit obligation 845,000
Accumulated OCI net gain 90,000
Interest on projected benefit obligation 64,000
Instructions
Calculate the pension asset / liability to be recorded at December 31, 2015. Show your calculations
Calculate the 2016 amortization of the net gain. The average remaining service life of employees is 10 years.Show your calculations
Explanation / Answer
(a)
PBO
845,000
Less Plan assets at fair market value
-630,000
Pension liability
$215,000
(b) amortization
Accumulated OCI net gain
90,000
Less : PBO (845,000 @10%)
84,500
$5,500
Hence amortization = 5,500/10
=$550
(a)
PBO
845,000
Less Plan assets at fair market value
-630,000
Pension liability
$215,000
(b) amortization
Accumulated OCI net gain
90,000
Less : PBO (845,000 @10%)
84,500
$5,500
Hence amortization = 5,500/10
=$550
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