Use the following information for questions 13 and 14 On January 1, 2015, Parks
ID: 2486680 • Letter: U
Question
Use the following information for questions 13 and 14 On January 1, 2015, Parks Co. has the following balances: Projected 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 2015 are: Service cost $240,000 Amortization of prior service costs 54,000 Contributions 270,000 Benefits paid 250,000 Actual return on plan assets 264,000 Amortization of net gain 18,000 13. The balance of the projected benefit obligation at December 31, 2015 is a. $4,494,000. b. $4,596,000. c. $4,860,000. d. $4,610,000. 14. The fair value of plan assets at December 31, 2015 is a. $3,506,000. b. $3,764,000. c. $4,034,000. d. $4,284,000.
Explanation / Answer
13. The balance of the projected benefit obligation at December 31, 2015 Projected benefit obligation $4,200,000 Add: Service cost $240,000 Less: Benefits paid ($250,000) Add: Settelment cost (4200000*0.10) $420,000 The balance of the projected benefit obligation at December 31, 2015 $4,610,000.00 Therefore, Option d.$4,610,000 is correct 14. The fair value of plan assets at December 31, 2015 Fair value of plan assets $3,750,000 Add: Actual return on plan assets $264,000 Add; Contributions $270,000 Less: Benefits paid ($250,000) The fair value of plan assets at December 31, 2015 $4,034,000 Therefore, Option c.$4,034,000 is correct