Question

Kingbird Company sponsors a defined benefit pension plan. The corporation's actuary provides the following information about the plan. January 1, 2017 $1,400 2,080 2,420 1,610 December 31, 2017 $2,080 2,970 3,550 2,520 Vested benefit obligation Accumulated benefit obligation Projected benefit obligation Plan assets (fair value) Settlement rate and expected rate of return Pension asset/liability Service cost for Contributions (funding in 2017) Benefits paid in 2017 10% 810 the year 2017 410 650 190 (a) Compute the actual return on the plan assets in 2017 Actual return on the plan assets (b) Compute the amount of the other comprehensive income (G/L) as of December 31, 2017. (Assume the January 1, 2017, balance was zero.) (Enter loss using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45). Net pension liability gains and losses (e) Compute the amount of net gain or loss amortization for 2017 (corridor approach). Net gain or loss amortization (d) Compute pension expense for 2017 Pension expense

Answer 1

a)

a) Actual return on plan assets: Particulars Fair value of plant assets as on December 31, 2017 Less: Fair value of plant assets as on January 1, 2017 Increase in Fair Value Less Amount (S) Amount (S) 2,520 1,400 1,120 650 190 Funding during the year Less: Benefits paid in 2017 460 660 Actual return on plan assets during the year

b)

b) Amount of Other Comprehensive Income Particulars Projected benefit obligation as on December 31, 2017 Less: Projected benefit obligation as on J Add: Interest on Pension benefit obligation (S2,420*10/100) Add: Service cost for the vear 2017 Less: Benefits Amount (S) Amount (S) Amount (S) 3,550 2,420 242 410 190 1, 2017 g the year 2.882 668 Loss on Pension Liab Fair value of plant assets as on December 31, 2017 Fair value of plant assets as on J Add: F Less: Benefits paid i Add: Expected return on plan assets ($1,400*10/100) 2,520 1,400 650 190 140 1,2017 g the year 2,000 520 -148 Gain on Pension Assets Net pension liability gains and losses (Losses)

c)

There is no amortization because the accumulated other comprehensive income balance as on January 1, 2017 is not given.

d)

d) Pension Expense: Particulars Service Cost Interest cost (S2,420*10/100) Less: Actual return on plan assets Gain on pension assets Amount (S) 410 242 660 520 512 Pension Expense