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(Select the best answer.) a. ○ The expected return on plan assets for the year is $7,000 X.08 =$560

(Select the best answer.) a. ○ The expected return on plan assets for the year is $7,000 X.08 =$560

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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Calculate the expected return on plan assets for the year using the following facts: Market-related value of plan assets (based on a calculated value) at beginning of the year: $7,500 Net adjustments (contributions and benefit payments during the year): $-500 Expected average market-related value of plan assets during the year: $7,000 Fair value of plan assets at beginning of the year: $7,000 Net Adjustments (contributions and benefit payments during the year): $-500 Expected average fair value of plan assets during the year: $6,500 Expected long-term rate of return: 8% Discount rate: 6% Defined benefit obligation beginning of the year: 10,000 (Select the best answer.) a. ○ The expected return on plan assets for the year is $7,000 X.08 =$560 b. The expected return on plan assets for the year is $6,500 X .06 = $390 c. There is no expected return on plan assets. The net interest cost is 10,000- 7,000-500 = $2,500 x 6% = $150 d. There is no expected return on plan assets. The net interest cost is $10,000-$7,000-$500 = $2,500 x 8% = $200
Transcribed Image Text:Calculate the expected return on plan assets for the year using the following facts: Market-related value of plan assets (based on a calculated value) at beginning of the year: $7,500 Net adjustments (contributions and benefit payments during the year): $-500 Expected average market-related value of plan assets during the year: $7,000 Fair value of plan assets at beginning of the year: $7,000 Net Adjustments (contributions and benefit payments during the year): $-500 Expected average fair value of plan assets during the year: $6,500 Expected long-term rate of return: 8% Discount rate: 6% Defined benefit obligation beginning of the year: 10,000 (Select the best answer.) a. ○ The expected return on plan assets for the year is $7,000 X.08 =$560 b. The expected return on plan assets for the year is $6,500 X .06 = $390 c. There is no expected return on plan assets. The net interest cost is 10,000- 7,000-500 = $2,500 x 6% = $150 d. There is no expected return on plan assets. The net interest cost is $10,000-$7,000-$500 = $2,500 x 8% = $200
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