Kingbird, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union,the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2025. Eachemployee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, thecontroller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of thePersonnel Department and an actuary from an insurance company, the controller develops the following information related to thepension plan.Average length of time to retirementExpected life duration after retirementTotal pension payment expected each year after retirement15 years11 yearsfor all employees. Payment made at the end of the year.$808,500 per yearThe interest rate to be used is 10%.Click here to view factor tables.On the basis of the information above, determine the present value of the pension obligation (liability). (Round factor values to 5decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

To determine the present value of the pension obligation (liability) for Kingbird, Inc., we need to…

Answered: Kingbird, Inc. is a furniture…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

How do I go about calculating pension payouts to determine a company's financial obligation? Additional info is below: Postretirement BenefitsPeyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees’ health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability
Ivanhoe, Inc. has a defined-benefit pension plan covering its 50 employees. Ivanhoe agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2790000. Ivanhoe determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 10 employees are expected to retire or quit each year. Assuming that Ivanhoe uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is $558000. O $651000. $930000. O $186000.
Classified Electronics has an unfunded retiree health care plan. Each of the company's three employees has been with the firm since its inception at the beginning of 2020. As of the end of 2021, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $66,000. Each of the employees will become full eligible for benefits after 20 more years of service but aren't expected to retire for 35 more years. The interest rate is 4%. Required: 1. What is the expected postretirement benefit obligation at the end of 2021? 2. what is the accumulated postretirement benefit obligation at the end of 2021? 3. what is the expected postretirement benefit obligation at the end of 2022? 4. What is the accumulated postretirement benefit obligation at the end of 2022? 1. Expected postretirement benefit obligation 2021 _______ 2. Accumulated postretirement benefit obligation 2021 _______ 3. Expected…
wifty Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $55,500. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $144,729 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation of $908,100, an accumulated benefit obligation of $802,100, and a debit balance of $400,100 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,200 at the beginning of the year. The actual and expected return on plan assets was $54,100. The settlement rate was 9%. No gains or losses occurred in 2020 and no benefits were paid. 4. Amortization of prior service cost was $50,500 in 2020. Amortization of net gain or loss was not required in 2020. (a)…
The trustee for the Bronson Corporation defined benefit pension plan sent a report to the CEO with the following information for the fiscal year: Beginning balance of plan assets at fair value $ 1,560,000 Actual return on plan assets $ 210,000 Employer’s contribution $ 150,000 Distributions to retirees $ 75,000 Service cost $ 125,000 Interest cost $ 156,000 Loss from changes in benefits or assumptions $ 35,000 Beginning balance of the PBO $ 1,580,000 The ending balance of plan assets is: Multiple Choice $1,770,000. $1,845,000. $1,920,000. $1,955,000.
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been with the firm since its inception at the beginning of 2020. As of the end of 2021, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $69,000. Each of the employees will become fully eligible for benefits after 21 more years of service but aren’t expected to retire for 35 more years. The interest rate is 5%. Required:1. What is the expected postretirement benefit obligation at the end of 2021?2. What is the accumulated postretirement benefit obligation at the end of 2021?3. What is the expected postretirement benefit obligation at the end of 2022?4. What is the accumulated postretirement benefit obligation at the end of 2022?
The accounting staff of Wildhorse Inc. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not readable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2021. (a)Determine the missing amounts in the 2021 pension worksheet, indicating whether the amounts are debits or credits. Annual Pension Expense debit/ credit Cash debit/ credit OCI - Prior Service Cost debit/ credit OCI - Gain/Loss debit/ credit pension asset/liability debit/credit Projected benefit obligation debit/credit Plan Assets debit/credit Balance Jan 1, 2021 1,190 Cr. 4,120 2,930 service cost $ 570 interest cost $ 326 actual return $ 422 unexpected gain 157 $ amortization of psc $ 61 contributions 1,190 1,190…
Cullumber Company has 120 employees who are expected to receive benefits under the company's defined-benefit pension plan. The total number of service-years of these employees is 1,200. The actuary for the company's pension plan calculated the following net gains and losses: For the Year EndedDecember 31 (Gain) Or Loss 2020 $560,000 2021 (474,000) 2022 910,000 Prior to 2020, there was no unrecognized net gain or loss.Information about the company's projected benefit obligation and market-related (and fair) value of plan assets follows: As of January 1 2020 2021 2022 Projected benefit obligation $2,020,000 $2,260,000 $2,860,000 Fair value of plan assets 1,600,000 2,380,000 2,470,000 Based on the above information about Cullumber Company, prepare a schedule which reflects the amount of net gain or loss to be amortized by the company as a component of pension expense for the years 2020, 2021, and 2022. The company amortizes…
Hijo Corp. is a publicly accountable entity that operates a defined benefit plan for its employees. Data relating to the pension plan is as follows: Defined benefit obligation (DBO), December 31, 2019 $22,300,000 Plan assets, December 31, 2019 24,500,000 Current service costs (CSC), December 31, 2020 2,200,000 Benefits paid to retirees, December 31, 2020 1,000,000 Actual return on plan assets, December 31, 2020 800,000 DBO, December 31, 2020, per actuary 24,000,000 Yield on high-quality corporate bonds 4% What is the total gain or loss that will flow to the other comprehensive income (OCI) part of the statement of comprehensive income for the year ended December 31, 2020? Question 12 options: a) $572,000 loss b) $180,000 loss c) $212,000 gain d) $392,000 gain
(Comprehensive 2-Year Worksheet) Lemke Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2017 and 2018. Check the below image for pension plan information. Instructions(a) Prepare a pension worksheet presenting both years 2017 and 2018 and accompanying computations and amortization of the loss (2018) using the corridor approach.(b) Prepare the journal entries (from the worksheet) to reflect all pension plan transactions and events at December 31 of each year.(c) For 2018, indicate the pension amounts reported in the financial statements.

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS