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A. At the beginning of current year, an entity provided the following information in connection with a defined benefit plan: Fair value of plan assets Projected benefit obligation Prepaid /accrued benefit cost 10,000,000 (13,000,000) (3,000,000) The entity revealed the following transactions affecting the plan for the current year: Current service cost 2,500,000 Past service cost - remaining vesting period of covered employees is 5 years Contribution to the plan Benefits paid to retirees Actual return on plan assets Decrease in projected benefit obligation due to change in actuarial assumptions 1,200,000 3,500,000 3,000,000 1,500,000 400,000 Discount rate 10% Expected return on plan assets 12% REQUIRED: 1. Compute the employee benefit expense for the current year 2. Compute the net remeasurement gain for the current year 3. Compute the fair value of plan assets at year-end 4. Compute the projected benefit obligation at year-end 5. What amount should be reported as accrued or prepaid benefit cost at year-end

A. At the beginning of current year, an entity provided the following information in connection with a defined benefit plan: Fair value of plan assets Projected benefit obligation Prepaid /accrued benefit cost 10,000,000 (13,000,000) (3,000,000) The entity revealed the following transactions affecting the plan for the current year: Current service cost 2,500,000 Past service cost - remaining vesting period of covered employees is 5 years Contribution to the plan Benefits paid to retirees Actual return on plan assets Decrease in projected benefit obligation due to change in actuarial assumptions 1,200,000 3,500,000 3,000,000 1,500,000 400,000 Discount rate 10% Expected return on plan assets 12% REQUIRED: 1. Compute the employee benefit expense for the current year 2. Compute the net remeasurement gain for the current year 3. Compute the fair value of plan assets at year-end 4. Compute the projected benefit obligation at year-end 5. What amount should be reported as accrued or prepaid benefit cost at year-end

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ACCOUNTING 4 EMPLOYEE BENEFITS A. At the beginning of current year, an entity provided the following information in connection with a defined benefit plan: Fair value of plan assets Projected benefit obligation Prepaid /accrued benefit cost 10,000,000 (13,000,000) (3,000,000) The entity revealed the following transactions affecting the plan for the current year: 2,500,000 1,200,000 Current service cost Past service cost - remaining vesting period of covered employees is 5 years Contribution to the plan Benefits paid to retirees Actual return on plan assets Decrease in projected benefit obligation due to change in actuarial assumptions 3,500,000 3,000,000 1,500,000 400,000 10% 12% Discount rate Expected return on plan assets REQUIRED: 1. Compute the employee benefit expense for the current year 2. Compute the net remeasurement gain for the current year 3. Compute the fair value of plan assets at year-end 4. Compute the projected benefit obligation at year-end 5. What amount should be reported as accrued or prepaid benefit cost at year-end
Transcribed Image Text:ACCOUNTING 4 EMPLOYEE BENEFITS A. At the beginning of current year, an entity provided the following information in connection with a defined benefit plan: Fair value of plan assets Projected benefit obligation Prepaid /accrued benefit cost 10,000,000 (13,000,000) (3,000,000) The entity revealed the following transactions affecting the plan for the current year: 2,500,000 1,200,000 Current service cost Past service cost - remaining vesting period of covered employees is 5 years Contribution to the plan Benefits paid to retirees Actual return on plan assets Decrease in projected benefit obligation due to change in actuarial assumptions 3,500,000 3,000,000 1,500,000 400,000 10% 12% Discount rate Expected return on plan assets REQUIRED: 1. Compute the employee benefit expense for the current year 2. Compute the net remeasurement gain for the current year 3. Compute the fair value of plan assets at year-end 4. Compute the projected benefit obligation at year-end 5. What amount should be reported as accrued or prepaid benefit cost at year-end
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