Question

A partially completed pension spreadsheet showing the relationships among the elements that comprise the defined benefit pension plan of Universal Products is given below. The actuary's discount rate is 5%. At the end of 2016, the pension formula was amended, creating a prior service cost of $280,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year as well as the previous two years. Required: Fill in the missing amounts. (Enter credit amounts with a minus sign and debit amounts with a positive sign.)

Answer 1

Net Pension Prior Service Cost AOCI Net LosS Pension (Liability Plan AoCI Expense Cash Assets PBO Assets $ in 000 Balance in Jan.1, 2018 Service Cost Interest cost 5% Expected retrun on Plant Assets Adjust for: Loss on Assets Amortization Prior Service Cost Amortization Net Loss Gain on PBO Prior Service Cost Cash Fundin Retiree Benefits Balance, Dec 31, 2018 260) 104 42 46.40 266 840) 104) 42 580 104 42 46.40) 46.40 0 16 16 16 0 0 0 28 0 14 14 0 0 28 28 0 0 (50) 648.40 113.60 (259.60) 252.00 72.00 (908.00)

Working Note: Prior service cost Average Service life Amortization per year (280,000/20) 280,000 20 14,000 Amortization of Net Loss Net Loss at the beginning of vear Less: 10% of highest of PBO or Assets highest of (840 x 10% or 580 x 10%) Total Loss Amortization 84 (84) Retiree Benefits Balance as on Jan, 1 2018 Service Cost Interest cost 5% Gain on PBO 840 104 42 28 958 908 (50) Less: Balance as on Dec 31, 2018 Retiree Benefits