Question

Interest (Cost) Rate Expected rate of return on plan assets Actual rate of return on plan assets Beginning of year balance in CASH 3% 3% 4% 120,000 Projected benefit obligation at the beginning of 2017 Service cost, 2017 Interest Cost Loss (gain) on PBO for assumption changes Less: Benefits paid to retirees during the year $ $ 350,000 40,000 $ $ 3,500 (45,000) Projected benefit obligation at the end of 2017 $ 250,000 Plan assets at the beginning of the year Actual return on plan assets Cash contributions to the pension plan in 2017 Less: Benefits paid to retirees during the year $ 44,000 Plan assets at the end of 2017. Additional information reported from the actuary and plan trustee: $ $ Prior Service Costs incurred beginning of 2016 Beginning of year balance in AOCI for Net Loss Average remaining service years of employees Beginning of year balance in AOCI for PSC Amortization of PSC Amortization of net loss Expected return on plan assets 40,000 43,750 4 years 30,000 $

Answer 1

Beginning projected benefit obligation (PBO)	$     350,000
Service cost	$        40,000
Interest cost [Interest cost rate * Beginning PBO](350000*3%)	$        10,500
Loss (gain) on PBO for assumption changes	$          3,500
Less: Benefits paid to retirees during the year	$     (45,000)
Ending projected benefit obligation (PBO)	$     359,000

  

Beginning Plan assets	$     250,000
Actual return on plan assets (250000*4%)	$        10,000
Cash contribution to plan assets	$        44,000
Less: Benefits paid to retirees	$     (45,000)
Plan assets at the end of 2017	$     259,000

	Beginning	Ending
Projected benefit obligation	$     350,000	$     359,000
Less: Plan assets	$     250,000	$     259,000
Net pension liability	$     100,000	$     100,000

Answer 19
The effect on net pension liability will be zero. It means no increase or decrease in net pension liability. (100000-100000)	0
Answer 20
Ending net pension liability	$     100,000