Question

Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2018. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the pla The actual return was also 10% in 2018 and 2019.' A consulting firm, engaged as actuary, recommends 6% as the appropriate discount rate. The service cost is $250,000 for 2018 and $360,000 for 2019. Year-end funding is $260,000 for 2018 and $270,000 for 2019. No assumptions or estimates were revised during 2018. "We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that Since the estimate didn't change, that also was the actual rate in 2019. Required: Calculate each of the following amounts as of both December 31, 2018, and December 31, 2019: (Enter your answers in thousands (.e., 200,000 should be entered as 200).) December 31, 2018 December 31, 2019 1. Projected benefit obligation 2. Plan assets 3. Pension expense 4. Net pension asset or net pension liability

Answer 1

Ś O -y-er er $250 Amollut in oc) Answer: D). calculation of projected benefit obligation particulars - amount Balance as ou Jan 1, 2018 Service cost $250 Add: Interest, costs (6++$0) Lese! Benefits paid Balance as cu pec 31, 2018 service cost $360 Add: Interest costs ($ 250 x 6%) Benefits paid $0 Balance as on Dec 31, 2019 $625 e) calculation of plan Quets particulars Balance as on Jan 1, 2018 Actual releeru ou plan assets (tox 10320 Add contributions made | $260 Less! Benefits paid Babuce as ou Dec 31,9018 $260 Actual return ou plau assels $260x10% $ 26 | Add: Contributions made $ 270 Lex Beue fil's paid Balance as on Dec 31, 2019_ $556 3) Calculation of peuziou expeuse particulars Service cost $250 Add: Interest cost ($0 x 6%) $0 Less Expected return oute play assets ($ ox$10%) penfiou expense 2018 $250 Serviee cost $360 Add: Interest east 4$850 x 673 $ 15 Less Expected return pu the plauassels $26 $200% 10% $349 pension expense 2019

llarg Amount 4) calculation of Net peusion asset/ Liability. - particulars projected benefit obligation $ 250 Less plan assets ($ 2009 Net peusion assels as ou Dec 31, 2018 projected benefit obligation $625 Less plan assets $556 Net pension Liabilily as ou Dec 31, 2014 $69 (در particulars 2018 Decal | 2014 Decall se project benefit obligation $250 $625 2) plan assets } 260 $ 556 3) pension expension $ 250 $349 ) Net peusion asselcou liability $10- Assets 169- Liabilily