Use the following infromation for the next two parts. On January 1, 2005 Wow Co.
ID: 2467514 • Letter: U
Question
Use the following infromation for the next two parts.
On January 1, 2005 Wow Co. has the following balances:
Project benefit obligation: 4,200,000
Fair Value of plan assets: 3,750,000
The settlement rate is 10%. Other data related to the pension plan for 2005 are:
Service Cost 240,000
Amortization of prior service costs 54,000
Contributions 270,000
Benefits Paid 225,000
Amortization of net gain 18,000
Actual return on plan assets 264,000
-The balance of the projected benefit obligation at December 31, 2005 is
a. 4,635.000
b. 4,629,000
c. 4,590,000
d. 4,572,000
-The fair value of plan assets at December 31, 2005 is
a.3,789,000
b. 4,059,000
c. 3,531,000
d. 4,284,000
Explanation / Answer
-The balance of the projected benefit obligation at December 31, 2005 is
= opening projected benefit obligation (PBO) + Service cost +Interest cost +Actuarial losses - Acturial gain -benefit paid
=4,200,000+240,000 +(10% of 4,200,000=420,000 )+0-0-2,25,000
=4635000
Therefore A option is correct
Note: amortization of net gain and prior service cost are not to be considderde in above formula.
B)
The fair value of planned asset =opening balance + return on planed assets+acturial gain -acturial loss+contribution -benefit paid
=3,750,000+264,000+0-0+270,000-225,000
=4,059,000
There fore B option is correct
Note: amortization of net gain and prior service cost are not to be considderde in above formula.
-The balance of the projected benefit obligation at December 31, 2005 is
= opening projected benefit obligation (PBO) + Service cost +Interest cost +Actuarial losses - Acturial gain -benefit paid
=4,200,000+240,000 +(10% of 4,200,000=420,000 )+0-0-2,25,000
=4635000
Therefore A option is correct
Note: amortization of net gain and prior service cost are not to be considderde in above formula.
B)
The fair value of planned asset =opening balance + return on planed assets+acturial gain -acturial loss+contribution -benefit paid
=3,750,000+264,000+0-0+270,000-225,000
=4,059,000
There fore B option is correct
Note: amortization of net gain and prior service cost are not to be considderde in above formula.