Intermediate Accounting 303: ACCT 303- 01 Spring 2018 ACCOUNTING Chapter 17 Hw Q

Question

Intermediate Accounting 303: ACCT 303- 01 Spring 2018 ACCOUNTING Chapter 17 Hw Question 16 (of 23) 10 10.00 points Pension data for Millington Enterprises include the following Discount rate, 10% Projected benefit obligation, January 1 Projected benefit obligation, December 3 Accumulated benefit obligation, January 1 Accumulated benefit obligation, December 31 Cash contributions to pension fund, December 31 Benefit payments to retirees, December 31 $370 475 310 Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31 Check my work ck

Explanation / Answer

16.

Service Cost is the Present value of benefits relating to service of employee in the current period.

Changes in annual ABO are mainly determined by changes in service costs, interest costs, contributions by plan participants, actuarial gains or losses, benefits paid during the year.

Opening ABO +Contribution - Benfits Paid + Service Cost = Closing ABO

==> $ in Million

310 + 160 - 56 + Service Cost = 425

==> Service Cost = 425 - 414 = $11 Million

17. All the five components of the Pension Expense are given

Pension Expense in $ Millions

Pension Expense = $43 Million

20.

PBO Opening $180 Million

+ Service Cost = $ 22 Million

+ Interest Cost = $ 9 Million

-Expected Return = $ 10 Million

+Actuarial (Gain)/Loss = $ (1) Million

+Prior Service Cost = 0

Pension Expense = $20 Million

Good luck

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