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 2019, the pension formula was amended, creating a prior service cost of $120,000. 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.
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 2019, the pension formula was amended, creating a prior service cost of $120,000. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 2019, the pension formula was amended, creating a prior service cost of $120,000. The expected rate of return on assets was 8%, and the average remaining service life of the active employee group is 20 years in the current year as well as the previous two years.
Transcribed Image Text:Prior
Net Pension
Plan
Service
Net Loss
Pension
(Liability)
($ in thousands)
PBO
Assets
Cost – AOCI
- AOCI
Expense
Cash
I Asset
Balance, Jan. 1, 2021
$ (680.0)
$
420.0 $
114.0
$
68.0
$ (260.0)
Service cost
88.0
Interest cost, 5%
(34.0)
Expected return on assets
(33.6)
Adjust for:
Loss on assets
8.0
Amortization:
Prior service cost
Amortization:
Net loss
Gain on PBO
12.0
Prior service cost
Cash funding
(72.0)
Retiree benefits
Balance, Dec. 31, 2021
$ (740.0) $
420.0
108.0
$
76.0
$
54.4
$
(248.0)
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