ezto.mheducation.com connect Intermediate Accounting 303: ACCT 303 01 Spring 201

Question

ezto.mheducation.com connect Intermediate Accounting 303: ACCT 303 01 Spring 2018 ACCOUNTING Chapter 17 HW Question 21 (of 23) 21. 00 points The projected benefit obligation was $220 million at the beginning of the year and $225 million at the end of the year. Service cost for the year was $13 milion. At the end of the year, pension benelits paid by the trustee were $9 milion. The actuary's discount rate was 5%. At the end of the year, actuary revised the estimate of the percentage rate of increase in compensation levels in upcoming yoars. What was the amount of the gain or loss the estimate change caused? esc 4

Explanation / Answer

SOLUTION

Amount of Gain = $10 million

Gain = End of the year PBO - Beginning of the year PBO - Service cost - Interest cost + Retiree benefits

= $225 million - $220 million - $13 million - (5% * $220 million) + $9 million

= $225 million - $220 million - $13 million - $11 million + $9 million

= $10 million

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