Problem 17-18 (IAA) Generous Company has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% the final year's salary. The annual benefit is payable at the multiplied by the number of years in service multiplied by end of each year. An employee was hired by the entity on January 1, 2000 and expected to retire on December 31, 2044. The employee's retirement is expected to span 21 years. The employee's final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. The present value of an ordinary annuity of 1 at 8% for 21 periods is 10.02 and the present value of 1 at 8% for 25 periods is 0.15. 1. What is the projected benefit obligation before amendment on January 1, 2020? 480,960 a. b. 320,000 c. 160,000 d. 400,000 2. What is the projected benefit obligation after amendment on January 1, 2020? a. 480,000 b. 721,440 c. 240,000 d. 320,640 3. What is the past service cost for 2020 as a result of the amendment? a. 160,000 b. 120,240 c. 240,480 d. 0

Problem 17-18 (IAA) Generous Company has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% the final year's salary. The annual benefit is payable at the multiplied by the number of years in service multiplied by end of each year. An employee was hired by the entity on January 1, 2000 and expected to retire on December 31, 2044. The employee's retirement is expected to span 21 years. The employee's final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. The present value of an ordinary annuity of 1 at 8% for 21 periods is 10.02 and the present value of 1 at 8% for 25 periods is 0.15. 1. What is the projected benefit obligation before amendment on January 1, 2020? 480,960 a. b. 320,000 c. 160,000 d. 400,000 2. What is the projected benefit obligation after amendment on January 1, 2020? a. 480,000 b. 721,440 c. 240,000 d. 320,640 3. What is the past service cost for 2020 as a result of the amendment? a. 160,000 b. 120,240 c. 240,480 d. 0

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 14CE

See similar textbooks

Similar questions

Given the following information for Tyler Companys pension plan at the beginning of the year, calculate the corridor, excess net loss (gain), and amortized net loss (gain). Assume an average remaining service life of 15 years.
Company A has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% multiplied by the number of years in service multiplied by the final year’s salary. The annual benefit is payable at the end of each year. An employee was hired by the entity on January 1,2000 and expected to retire on December 31, 2044. The employee’s retirement is expected to span 21 years. The employee’s final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. Compute for the ff: 1)PBO, Jan 1, 2020 (before amendment), Jan 1, 2020 (after amendment), Dec. 31,2020, Dec. 31, 2021 and Dec. 31 2022 2)Past service cost, 2020, 2021 and 2022 3)Current service cost, 2020, 2021 and 2022 4)Interest expense, 2020, 2021 and 2022
Company A has established a defined benefit plan for the employee. Annual payments under the plan are equal to highest lifetime salary multiplied by 2% multiplied by the number of years with the entity. On December 31, 2020, an employee had worked with the entity for 15 years. The current annual salary of the employee is P600,000. The employee is expected to retire in 10 years and the increase in salary is expected to be 4% per year. The discount rate is 10%. The employee is expected to live 8 years after retirement and shall receive the first annual pension payment one year after retirement. Compute for the ff: 1)Current service cost in 2021, 2022, 2023 and 2024 2)Interest expense in 2021, 2022, 2023 and 2024 3)PBO, Dec. 31,2021, Dec. 31,2022, Dec. 31,2023 and Dec. 31,2024
expected to retire on December 31, 2044. The employee's An employee was hired by the entity on January 1, 2000 and 2. -What is the projected benefit obligation after amendment 3. What is the past service cost for 2020 as a result of the Problem 17-13 (IAA) a end of each year. retirement is expected to span 21 years. The employee's final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2020, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. The present value of an ordinary annuity of 1 at 8% for 21 periods is 10.02 and the present value of 1 at 8% for 25 periods is 0.15. 1. What is the projected benefit obligation before amendment on January 1, 2020? a. 480,960 b. 320,000 c. 160,000 d. 400,000 2. -What is the projected benefit obligation after amendment on January 1, 2020? a. 480,000 b. 721,440 c. 240,000 d. 320,640 amendment? 160,000 b. 120,240…
Provide solution on each answer. Thank You. Generous Company has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% multiplied by the number of years in service multiplied by the final year’s salary. The annual benefit is payable at the end of each year. An employee was hired by the entity on January 1, 2001 and expected to retire on December 31, 2045. The employee’s retirement is expected to span 21 years. The employee’s final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2021, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. The present value of an ordinary annuity of 1 at 8% for 21 periods is 10.02 and the present value of 1 at 8% for 25 periods is 0.15. 1. What is the projected benefit obligation before amendment on January 1, 2021? 2. What is the projected benefit obligation after on January 1,…
At the end of Year 1. Carrot Company revised the pension benefit formula for its defined benefit pension plan to increase benefits earned in prior years. The actuarial present value of the increased benefits is $200, the average remaining service life of the employees affected by the change is 10 years, and Carrot will use the average remaining service life method for this change. Which of the following will be included in the journal entry to record prior service cost amortization in Year 2? O Debit to pension expense for $20 O Credit to pension expense for $20 O Credit to projected benefit obligation for $20 O Debit to prior service cost for $20
Provide solution on each answer. Thank You. Generous Company has established a defined benefit plan indicating a plan formula for annual benefit equal to 2% multiplied by the number of years in service multiplied by the final year’s salary. The annual benefit is payable at the end of each year.An employee was hired by the entity on January 1, 2001 and expected to retire on December 31, 2045. The employee’s retirement is expected to span 21 years. The employee’s final salary at retirement is expected to be P800,000 and the appropriate discount rate is 8%. On January 1, 2021, the plan formula was amended by increasing the percentage from 2% to 3%. The amendment was made retroactive to consider past service years. The present value of an ordinary annuity of 1 at 8% for 21 periods is 10.02 and the present value of 1 at 8% for 25 periods is 0.15.1. What is the projected benefit obligation before amendment on January 1, 2021?a. 400,000 b.160,000 c. 320,000 d. 480,960 2.What is the projected…
The company agrees to provide a lump-sum retirement benefit to employees equal to 69% of final salary for each year of service. Information on an employee is shown below Salary level on January 1, 2021 3,000,000 Annual salary increase starting in 2022 2% Service years before retirement (Jan 1, 2021 to Dec 31, 2025) 5 years 10% Discount rate per year What is the current service cost for the year ended December 31, 2021?
ABC Inc. follows IFRS for financial reporting purposes and has established a defined benefit pension plan for its employees. Pertinent details of the plan for the year ended December 31, 2025 are as follows: current service costs, accrued end of year $52,000 past service costs, accrued beginning of year $20,000 benefit payents to retirees, paid evenly throughout the year $85,000 discount rate used by actuary 5% actuarial losses in the year $10,000 pension obligation as at January 1, 2025 $750,000 pension assets as at January 1, 2025 $725,000 What is the balance of the pension obligation at December 31, 2025? Detail explanation, please
FMC Inc. provides its employees with a defined benefit pension plan. Details are as follows: Present value defined benefit obligation (DBO) — December 31, 2020 $7,000,000 Plan assets — December 31, 2020 $5,900,000 Plan’s actuary confirmed that 4% is the appropriate interest rate to use. Current service costs (CSC) for the year $590,000 Past service costs (PSC) (improvement in benefits) — January 1, 2020 $60,000 Expected ending DBO — December 31, 2020 $7,200,000 Expected ending plan assets — December 31, 2020 $6,500,000 Remitted to pension trustee — evenly throughout year $670,000 Payments to retirees — evenly throughout year $640,000 What journal entry should FMC prepare to record the remeasurement gains/losses and actuarial gains/losses for the year? Assume FMC reports under IFRS. Question 18 options: a) DR OCI — actuarial losses 200,000 DR OCI — losses on remeasurement of plan assets 600,000 CR Net defined benefit liability…
FMC Inc. provides its employees with a defined benefit pension plan. Details are as follows: $7,000,000 Present value defined benefit obligation (DBO) – December 31, 2020 $5,900,000 Plan assets - December 31, 2020 Plan's actuary confirmed that 4% is the appropriate interest rate to use. $590,000 Current service costs (CSC) for the year Past service costs (PSC) (improvement in benefits)- January 1, 2020 Expected ending DBO – December 31, 2020 Expected ending plan assets Remitted to pension trustee – evenly throughout year Payments to retirees- evenly throughout year $60,000 $7,200,000 $6,500,000 $670,000 $640,000 December 31, 2020 What journal entry should FMC prepare to record the remeasurement gains/losses and actuarial gains/losses for the year? Assume FMC reports under IFRS. DR OCI - actuarial losses a) DR OCI - losses on remeasurement of plan 200,000 assets 600,000 CR Net defined benefit liability 800,000 DR OCI - actuarial losses b) DR Net defined benefit liability 200,000 400,000…
the end of Year 1, Carrot Company revised the pension benefit formula for its defined benefit pension plan to crease benefits earned in prior years. The actuarial present value of the increased benefits is $200, the average maining service life of the employees affected by the change is 10 years, and Carrot will use the average emaining service life method for this change. Which of the following will be included in the journal entry to record this change to the pension? O Credit to prior service cost for $20 Debit to projected benefit obligation for $200 O Credit to projected benefit obligation for $20 O Debit to prior service cost for $200 O Debit to pension expense for $200