Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pen

Question

Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 104 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 104 employees who are expected to receive benefits under the plan is 1,248. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2018 was $5,568,000. On December 31, 2018 the following information was provided concerning the pension plan's operations for its first year.
Employer's contribution at end of year $1,640,000 Service cost 640,000 Projected benefit obligation 6,581,600 Plan assets (at fair value) 1,640,000 Expected return on plan assets 9% Settlement rate 8% Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 104 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 104 employees who are expected to receive benefits under the plan is 1,248. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2018 was $5,568,000. On December 31, 2018 the following information was provided concerning the pension plan's operations for its first year.
Employer's contribution at end of year $1,640,000 Service cost 640,000 Projected benefit obligation 6,581,600 Plan assets (at fair value) 1,640,000 Expected return on plan assets 9% Settlement rate 8% Tucker, Inc. on January 1, 2018 initiated a noncontributory, defined-benefit pension plan that grants benefits to its 104 employees for services rendered in years prior to the adoption of the pension plan. The total expected service-years of the 104 employees who are expected to receive benefits under the plan is 1,248. An actuarial consulting firm has indicated that the present value of the projected benefit obligation on January 1, 2018 was $5,568,000. On December 31, 2018 the following information was provided concerning the pension plan's operations for its first year.
Employer's contribution at end of year $1,640,000 Service cost 640,000 Projected benefit obligation 6,581,600 Plan assets (at fair value) 1,640,000 Expected return on plan assets 9% Settlement rate 8%

Explanation / Answer

(a)

*1,248 / 104 = 12 years average remaining service life

Service Cost $640,000 Interest on projected benefit obligation($5,568,000 × 8%) $445,440 Amortization of prior service cost*($5,568,000 / 12) $464,000 Pension expense $1,549,440

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.