P19.12 You are the auditor of Beaton and Gunter Inc., the Canadian subsidiary of a public multinational engineering company that offers a defined benefit pension plan to its eligible employees. Employees are permitted to join the plan after two years of employment, and benefits vest immediately. You have received the following information from the fund trustee for the year ended December 31, 2020: Discount rate 5% Rate of compensation increase 3.5% Defined Benefit Obligation Defined benefit obligation at January 1, 2020 $11,375,000 Current service cost 425,000 Interest cost 568,750 Benefits paid 756,250 Actuarial loss, end of period 631,250 Plan Assets Fair value of plan assets at January 1, 2020 9,062,500 Actual return on plan assets, net of expenses 1,125,000 Employer contributions 493,750 Employee contributions 81,250 Benefits paid 756,250 Other relevant information: The net defined benefit liability on January 1, 2020, is $2,312,500. Employee contributions to the plan are withheld as payroll deductions, and are remitted to the pension trustee along with the employer contributions. Instructions a. Prepare a pension work sheet for the company. b. Prepare the employer's journal entries to reflect the accounting for the pension plan for the year ended December 31, 2020. c. Prepare a schedule reconciling the plan's surplus or deficit with the pension amounts reported on the December 31, 2020 SFP. d. Assume that interest rates are falling, and that the rate of compensation increase is expected to fall as well. Explain what effect this is likely to have on the surplus or deficit of the plan.
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P19.12 You are the auditor of Beaton and Gunter Inc., the Canadian subsidiary of a public multinational engineering company that offers a defined benefit pension plan to its eligible employees. Employees are permitted to join the plan after two years of e
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Sheridan Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1997. Prior to 2020, cumulative net pension expense recognized equaled cumulative contributions to the plan. Other relevant information about the pension plan on January 1, 2020, is as follows. 1. The company has 200 employees. All these employees are expected to receive benefits under the plan. The average remaining service life per employee is 12 years. 2. The projected benefit obligation amounted to $4,903,000 and the...
Coronado Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $56,100. Minimize global navigation res a contribution to the pension trustee amounting to $136,572 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $903,400,...
Coronado Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $56,100. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $136,572 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation...
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