Computing ABO, PBOMallard Company sponsors a pension plan with the following pension benefit:Benefit paid at each year-end during retirement = (Number of years worked x Annual salary at retirement)+25Employee Josie began work with the company and received credit for service as of January 1 of Year 1.Josie is expected to work a total of 30 years with an annual salary at retirement of $100,000. She isexpected to draw 10 years of retirement benefits. The discount rate is 10%.Note: Carry all decimals in calculations; round the final answer to the nearest dollar.a. Compute the PBO on December 31 of Year 10, if Josie's current salary is $30,000.b. Compute the ABO on December 31 of Year 10, if Josie's current salary is $30,000.

PBO- Projected Benefit Obligation:The projected benefit obligation is a measurement used to…

Answered: Mallard Company sponsors a pension plan…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter4: Income Exclusions

Section: Chapter Questions

Problem 36P

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CARISIC Co. has established a defined benefit pension plan for a loan officer. Annual payments under the pension plan are equal to the loan officer’s highest lifetime salary multiplied by 3% multiplied by number of years with the entity. On December 31, 2019, the loan officer had worked for 15 years. The current salary is P500,000. The loan officer is expected to retire in 5 years and the salary increases are expected to average 4% per year during that period. The employee is expected to live for 6 years after retiring and will receive the first annual pension payment one year after retirement. The discount rate is 12%. The relevant present value factors are 4.111 for an ordinary annuity of 1 at 12% fir 6 periods and 0.567 for 1 at 12% for 5 periods. The future value factor of 1 at 4% for 5 periods is 1.217. What is the defined benefit obligation on December 31, 2019? 225,000 524,460 608,500 638,269 answer not given
Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to: 1.6% * service years * final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2002 and is expected to retire at the end of 2036 after 35 years’ service. Her retirement is expected to span 18 years. Davenport’s salary is $90,000 at the end of 2016 and the company’s actuary projects her salary to be $240,000 at retirement. The actuary’s discount rate is 7%. Required: 1. Draw a time line that depicts Davenport’s expected service period, retirement period, and a 2016 measurement date for the pension obligation. 2. Estimate by the projected benefits approach the amount of Davenport’s annual retirement payments earned as of the end of 2016. 3. What is the company’s projected benefit obligation at the end of 2016 with respect to Davenport? 4. If no estimates are changed in the meantime, what will be the company’s projected benefit obligation at the…
Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to: 1.6% * service years * final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2002 and is expected to retire at the end of 2036 after 35 years’ service. Her retirement is expected to span 18 years. Davenport’s salary is $90,000 at the end of 2016 and the company’s actuary projects her salary to be $240,000 at retirement. The actuary’s discount rate is 7%. At the beginning of 2017, changing economic conditions caused the actuary to reassess the applicable discount rate. It was decided that 8% is the appropriate rate. Required: Calculate the effect of the change in the assumed discount rate on the PBO at the beginning of 2017 with respect to Davenport.
Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to: 1.6% * service years * final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2002 and is expected to retire at the end of 2036 after 35 years’ service. Her retirement is expected to span 18 years. Davenport’s salary is $90,000 at the end of 2016 and the company’s actuary projects her salary to be $240,000 at retirement. The actuary’s discount rate is 7%. Required: 1. What is the company’s projected benefit obligation at the beginning of 2016 (after 14 years’ service) with respect to Davenport? 2. Estimate by the projected benefits approach the portion of Davenport’s annual retirement payments attributable to 2016 service. 3. What is the company’s service cost for 2016 with respect to Davenport? 4. What is the company’s interest cost for 2016 with respect to Davenport? 5. Combine your answers to requirements 1, 3, and 4 to determine the…
achs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.4% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $97,000 at the end of 2021 and the company's actuary projects her salary to be $315,000 at retirement. The actuary's discount rate is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Estimate by the projected benefits approach the portion of Davenport's annual retirement payments attributable to 2021 service.3. What is the company's service cost for 2021 with respect to Davenport? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.)4. What is the company's interest cost for 2021 with respect to Davenport?…
The ABC corporation pension plan provides a lifetime annual income to its employees upon retirement at age 65. The plan provides 2% for each year of service of the average of the employee's earnings for their last 2 years on the job. Mark retires at age 65 with 15 years of service. His earnings for his last 2 years were $56,697 and $55,530. What is his annual pension benefit? Round your answer to the nearest dollar.
Your employer uses a final pay benefit formula to determine retirement payments to its employees. The employee receives an annual benefit of 3% of her average salary during her last 5 years of service times her total years employed. If she has 25 years of total service and her average salary over her last 5 years was $75,000, calculate her annual retirement benefit.
plan for an employee. Annual payments under the pension Jessabel Company has established a defined benefit pension plan are equal to the employee's highest lifetime salary The employee is expected to retire in 5 years and the salary multiplied by 3% multiplied by number of years with the On December 31, 2020, the employee had worked for Jessabe Problem 17-10 (IAA) entity. Company for 15 years. The current salary is P500,000 increases are expected to average 4% per year during th period. The employee is expected to live for 6 years after retirine and will receive the first annual pension payment one yea after retirement. The discount rate is 12%. Future value of 1 at 4% for 5 periods PV of an ordinary annuity of 1 at 12% for 6 periods PV of 1 at 12% for 5 periods 1.217 4.111 0.567 What is the projected benefit obligation on December 31, 2020? a. 638,269, b. 225,000 c. 524,460 d. 608,500
Sachs Brands’ defined benefit pension plan specifies annual retirement benefits equal to: 1.6% * serviceyears * final year’s salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginningof 2002 and is expected to retire at the end of 2036 after 35 years’ service. Her retirement is expected tospan 18 years. Davenport’s salary is $90,000 at the end of 2016 and the company’s actuary projects her salary tobe $240,000 at retirement. The actuary’s discount rate is 7%.Required:1. Draw a time line that depicts Davenport’s expected service period, retirement period, and a 2016 measurementdate for the pension obligation.2. Estimate by the accumulated benefits approach the amount of Davenport’s annual retirement payments earnedas of the end of 2016.3. What is the company’s accumulated benefit obligation at the end of 2016 with respect to Davenport?4. If no estimates are changed in the meantime, what will be the accumulated benefit obligation at the end of2019…
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $93,000 at the end of 2021 and the company's actuary projects her salary to be $295,000 at retirement. The actuary's discount rate is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) At the beginning of 2022, the pension formula was amended to: 1.60% x Service years x Final year's salary The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2022 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at…
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2007 and is expected to retire at the end of 2041 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $93,000 at the end of 2021 and the company's actuary projects her salary to be $295,000 at retirement. The actuary's discount rate is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What is the company's projected benefit obligation at the beginning of 2021 (after 14 years' service) with respect to Davenport? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) 2. Estimate by the projected benefits approach the portion of Davenport's annual retirement payments attributable to 2021 service. 3.…
Clark Industries has a defined benefit pension plan that specifies annual, year-end retirement benefits equal to: 1.3% x Service years × Final year's salary Stanley Mills was hired by Clark at the beginning of 2005. • Mills is expected to retire at the end of 2049 after 45 years of service. His retirement is expected to span 15 years. At the end of 2024, 20 years after being hired, his salary is $81,000. • The company's actuary projects Mills's salary to be $280,000 at retirement. The actuary's discount rate is 8%. For all requirements, round final answers to the nearest whole dollars. Do not round intermediate calculations. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Estimate the amount of Stanley Mills's annual retirement payments for the 15 retirement years earned as of the end of 2024. 2. Suppose Clark's pension plan permits a lump-sum payment at retirement in lieu of annuity payments. Determine…

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