Question

#4 Velasquez Company has available the following information about its defined-benefit pension plan for the year ending December 31, 2018: Service cost for 2018 Accumulated benefit obligation Plan assets at fair value Accumulated OCI (PSC) Vested benefit obligation Market-related asset value Projected benefit obligation Accumulated OCI net gain Interest on projected benefit obligation $ 45,000 683,000 630,000 300,000 505,000 725,000 865,000 90,000 64,000 Instructions (a) Calculate the pension asset / liability to be recorded at December 31, 2018. (b) Calculate the 2018 amortization of the net gain. The average remaining service life of employees is 10 years. 2 #5 McDonald Corp., a company whose stock is publicly traded, provides a noncontributory defined-benefit pension plan for its employees. The company's actuary has provided the following information for the year ended December 31, 2018 Projected benefit obligation Accumulated benefit obligation Fair value of plan assets Service cost Interest on projected benefit obligation Amortization of prior service cost Expected and actual return on plan assets $730,000 545,000 860,000 240,000 24,000 60,000 82,500 The market-related asset value equals the fair value of plan assets. No contributions have been made for 2018 pension cost. In its December 31, 2018 balance sheet, McDonald should report a pension asset/ liability of: a. Pension liability of $730,000 b. Pension asset of $860,000 c. Pension asset of $130,000 d. Pension liability of $545,000

Answer 1

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Answer to Problem #5 Mc Donald

Ending Balance of PBO ($730,000)

Ending Balance of Planned Assets $860,000

Net Planned Asset = $860,000 + ($730,000)

= $ 130,000 (i.e option c Net Pension Asset of $ 130,000)