n January 1, 2017, Quayle Incorporated amended its pension plan which caused an
ID: 2543816 • Letter: N
Question
n January 1, 2017, Quayle Incorporated amended its pension plan which caused an increase of ion. The company has 400 employees who are expected to s under the company's defined-benefit pension plan. The personnel department provided $6,000,000 in its projected benefit obligati the following information regarding expected employee retirements: Expected Retirements Number of Employees 40 120 60 160 20 400 On December 31 2017 2018 2019 2020 2021 The company plans to use the years-of-service method in calculating the amortization of unrecognized prior service cost as a component of pension expense. What is the amount of annual prior service cost amortization for the year 2018? a. $2,220,000 b. $2,000,000 c. S1,860,000 d. $1,800,000 8. ECN Inc. had a projected benefit obligation of $3,100,000 and plan assets of $3,300,000 at January 1, 2018. ECN's AOCI-net gain was $475,000 at January 1, 2018. The average remaining service period of its employees is 7.5 years. a. $O. b. c. d. reduce pension expense by $19,333. increase pension expense by $47,500 reduce pension expense by $475,000. 9. The EPBO for a particular employee's postretirement health care costs on January 1, 2018, was $30,000. The APBO at the beginning of the year was $6,000. The appropriate discount rate for this postretirement plan is 5%. The employee is expected to serve the company for a total of twenty-five years with five of those years already served as of January 1, 2018. The service cost is for 2018 is $1,260. What is the APBO at December 31, 2018? a. $6,300. b. $7,200 c. $7,500. d. $7,560.Explanation / Answer
SOLUTION
7. Annual prior service cost amortization for 2018 is 1,800,000.
Computation of Service-Years
Cost per service year = $6,000,000 / 1,200 = $5,000
Quayle Incorporated
Computation of Annual Prior Service Cost Amortization
Year Total 2017 40 120 60 160 20 400 2018 120 60 160 20 360 2019 60 160 20 240 2020 160 20 180 2021 20 20 1,200Related Questions
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