Follow instructions below: Hemingway Corporation Pension Data for 2015: Prior se
ID: 2469840 • Letter: F
Question
Follow instructions below:
Hemingway Corporation Pension Data for 2015:
Prior service cost due to 2015 amendment
70,000
PBO, January 1, 2015
1,010,000
FMV, January 1, 2015
1,210,000
Settlement interest rate
0.08
Expected return on plan assets
0.10
Actual return on plan assets
0.09
Liability loss (gain)
(50,000)
Contribution to plan trustee (made at end of year)
110,000
Service cost
125,000
Payments to retired employees
40,000
Include description on left side and amounts on right hand side. (show any extra calculations to the side so I can give partial credit if needed)
A. Compute the ending FMV of plan assets.
B. Compute pension over or underfunded amounts. State how this amount will be shown on financial statements.
Hemingway Corporation Pension Data for 2015:
Prior service cost due to 2015 amendment
70,000
PBO, January 1, 2015
1,010,000
FMV, January 1, 2015
1,210,000
Settlement interest rate
0.08
Expected return on plan assets
0.10
Actual return on plan assets
0.09
Liability loss (gain)
(50,000)
Contribution to plan trustee (made at end of year)
110,000
Service cost
125,000
Payments to retired employees
40,000
Explanation / Answer
CALCULATION OF ENDING FMV ON PLAN ASSETS
____________________________________________________________________________________
$ $
FMV, JAN. 1, 2015 1,210,000
Contributions 110,000
Prior Service cost (70,000)
Liability loss (50,000)
Service cost (125,000)
Payment to retired exployees (40,000)
Interest cost @ 8% on PBO 1,010,000: (80,800) (255,000)
FMV, DECE. 31, 2015 954,200
B. Expected return $1,210,000 x 10% = $121,000
Actual Return $1,210,000 x 9% = $108,900
Unrealised gain = $12,100
This unrealised gain $12,100 will be shown in Financial statements