What type of event creates a prior service cost? The prior service cost is amortized to...
What type of event creates a prior service cost?
The prior service cost is amortized to Pension expense over what period?
Homework Answers
Past service cost arises when an organization implements a defined benefit plan or changes in the benefits payable under the existing defined benefit plan.
Companies should amortize prior service cost to pension expense over the future periods in which those employees active on the amended date are expected to receive benefits.
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What type of event creates a prior service
cost?
The prior service cost is amortized to...
2.6. Which of the following statements is false? A) Prior service cost is amortized over the average remaining serv...
2.6. Which of the following statements is false? A) Prior service cost is amortized over the average remaining service life of the employees. B) Net gains/losses from a defined benefit pension plan have to be amortized over the average remaining service life of the employees. C) The amortization of prior service cost increases pension expense. D) The amortization of prior service cost decreases net income. 2.7. On October 1, the board of directors declares a cash dividend, to be paid...
1. Prior service cost 2. Prior service cost amortization Service cost 3. Interest cost 5. Pension...
1. Prior service cost 2. Prior service cost amortization Service cost 3. Interest cost 5. Pension expense 4. Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary...
Waddle Company amended its defined benefit pension plan on January 1, 2024, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at
Waddle Company amended its defined benefit pension plan on January 1, 2024, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at the rate of about 10 each year at the end of each of the next eight years.Required:Using the service method, calculate the amount of prior service cost to be amortized to pension expense in 2024.Using the straight-line method, calculate the...
The pension plan was amended last year, creating a prior service cost of $180 million. Service cost and interest cost f...
The pension plan was amended last year, creating a prior service cost of $180 million. Service cost and interest cost for the year were $46 million and $22 million, respectively. At the end of the year, there was a negligible balance in the net gain-pensions account. The actual return on plan assets was $22 million although it was expected to be $24 million. On average, employees' remaining service life with the company is 15 years. Complete the below table to...
Clark Kent Co. approved a prior service obligation of $120,000 on January 1, 2020, which granted...
Clark Kent Co. approved a prior service obligation of $120,000 on January 1, 2020, which granted retroactive benefit to employees. Assuming an average remaining service period of 10 years for all active plan participants, what is the effect on pension expense of the prior service cost? Note: Indicate a decrease with a negative sign. Increase (decrease) to pension expense:
Problem 3. Amortization of prior service cost using years-of-service method. On January 1, 2016, Solano Incorporated...
Problem 3. Amortization of prior service cost using years-of-service method. On January 1, 2016, Solano Incorporated amended its pension plan which caused an increase of $6,000,000 in its projected benefit obligation. The company has 400 employees who are expected to receive benefits under the company's defined benefit pension plan. The personnel department provided the following information regarding expected employee retirements: Number of Employees Expected Retirements on December 31 40 2016 120 2017 60 2018 160 2019 2020 400 The company...
When a company amends a pension plan, for accounting purposes, prior service costs should be: Select...
When a company amends a pension plan, for accounting purposes, prior service costs should be: Select one: a. added as a liability on the company's primary books. b. recorded as an increase in the projected benefit obligation. c. amortized in accordance with procedures used for income tax purposes. d. reported as an expense in the period the plan is amended e. reported as an adjustment to Retained Earnings
Intermediate Accounting 2 - Chapter 20: Multiple Choice 1. A pension liability is reported when a....
Intermediate Accounting 2 - Chapter 20: Multiple Choice 1. A pension liability is reported when a. the accumulated benefit obligation is less than the fair value of pension plan assets. b. the projected benefit obligation exceeds the fair value of pension plan assets. c. accumulated other comprehensive income exceeds the fair value of pension plan assets. d. the pension expense reported for the period is greater than the funding amount for the same period. 2. The relationship between the amount...
The Warren Group's pension cost is $46 million. This amount includes a $54 million service cost,...
The Warren Group's pension cost is $46 million. This amount includes a $54 million service cost, a $33 million interest cost, a $46 million reduction for the expected return on plan assets, and a $5 million amortization of a prior service cost. Determine the components of pension expense that affects the net pension liability. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double...
The pension plan was amended last year, creating a prior service cost of $10 million. Service...
The pension plan was amended last year, creating a prior service cost of $10 million. Service cost and interest cost for the year were $12 million and $5 million, respectively. At the end of the year, there was a negligible balance in the net gain-pensions account. The actual return on plan assets was $5 million although it was expected to be $6 million. On average, employees' remaining service life with the company is 10 years. What was the total pension...
2.6. Which of the following statements is false? A) Prior service cost is amortized over the average remaining service life of the employees. B) Net gains/losses from a defined benefit pension plan have to be amortized over the average remaining service life of the employees. C) The amortization of prior service cost increases pension expense. D) The amortization of prior service cost decreases net income. 2.7. On October 1, the board of directors declares a cash dividend, to be paid...
1. Prior service cost 2. Prior service cost amortization Service cost 3. Interest cost 5. Pension expense 4. Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.6% × service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary...
The pension plan was amended last year, creating a prior service cost of $180 million. Service cost and interest cost for the year were $46 million and $22 million, respectively. At the end of the year, there was a negligible balance in the net gain-pensions account. The actual return on plan assets was $22 million although it was expected to be $24 million. On average, employees' remaining service life with the company is 15 years. Complete the below table to...
Problem 3. Amortization of prior service cost using years-of-service method. On January 1, 2016, Solano Incorporated amended its pension plan which caused an increase of $6,000,000 in its projected benefit obligation. The company has 400 employees who are expected to receive benefits under the company's defined benefit pension plan. The personnel department provided the following information regarding expected employee retirements: Number of Employees Expected Retirements on December 31 40 2016 120 2017 60 2018 160 2019 2020 400 The company...
The Warren Group's pension cost is $46 million. This amount includes a $54 million service cost, a $33 million interest cost, a $46 million reduction for the expected return on plan assets, and a $5 million amortization of a prior service cost. Determine the components of pension expense that affects the net pension liability. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double...
The pension plan was amended last year, creating a prior service cost of $10 million. Service cost and interest cost for the year were $12 million and $5 million, respectively. At the end of the year, there was a negligible balance in the net gain-pensions account. The actual return on plan assets was $5 million although it was expected to be $6 million. On average, employees' remaining service life with the company is 10 years. What was the total pension...
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