ezto mheducation.com E connect Intermediate Accounting 303: ACCT 303 01 Spring 2

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ezto mheducation.com E connect Intermediate Accounting 303: ACCT 303 01 Spring 2018 ACCOUNTING Chapter 17 Hw Question 16 (of 23) 16. 10.00 points Pension data for Millington Enterprises include the following: (S in millions) Discount rate, 10% Projected benefit obligation, January 1 Projected benefit obligation, December 31 Accumulated benefit obligation, January 1 Accumulated benefit obligation, December 31 Cash contributions to pension fund, December 31 Benefit payments to retirees, December 31 $370 475 310 425 160 56 Required Assuming no change pension expense for the year ended December 31 in actuarial assumptions and estimates, determine the service cost component of $425 million Check my work esc 20 F7 F3 F1

Explanation / Answer

Solution: Service cost       $ 124 million Working Notes: PBO of Beginning of the year + service cost + Interest cost +Loss (gain) on PBO - Retiree benefits = PBO of End of the year $370 + service cost + [PBO of Beginning of the year x disc. Rate ] +0 - 56 = 475 $370 + service cost + [370 x 10% ] +0 - 56 = 475 $370 + service cost + 37 +0 - 56 = 475 Service cost = 475 + 56 - 37 - 370 Service cost = 124 Service cost = $124 million Please feel free to ask if anything about above solution in comment section of the question.

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