Question 2 (3 points—25 minutes)
The following information pertains to A&E Co.’s defined benefit pension plan for the year 2013.
|
Projected benefit obligation at 1/1/2013 |
$600,000 |
|
Fair value of pension plan assets 1/1/2013 |
420,000 |
|
Unrecognized prior service costs at 1/1/2013 |
240,000 |
|
Service cost |
80,000 |
|
Amortization of prior service costs |
20,000 |
|
Contributions to the plan |
40,000 |
|
Benefits paid |
15,000 |
|
Actual and expected return on plan assets |
6% |
|
Interest/discount rate used |
6 % |
a. Show calculations to compute the pension expense for 2013.
b. Show calculations to compute the ending balance of the projected benefit obligation at 12/31/2013.
c. Show calculations to compute the ending balance of the plan assets at 12/31/2013.
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