3. (15 points) On January 1, 2020, assume that Twister Construction Company agreed to construct an observatory for Smartmouth College for $137 million. Smartmouth College must pay $68.50 million upon signing and $34.250 million in 2021 and 2022. Expected construction costs are $20.550 million for 2020, $51.375 million for 2021, and $30.8250 million for 2022. a. Assuming that Twister uses the completed-contract method, indicate the following (in millions of dollars, rounded to three decimal places): 1. Net contract gain (loss) for 2020. 2. Net contract gain (loss) for 2021. 3. Net contract gain (loss) for 2022. 4. Balance in the Construction in Process account on December 31, 2020. 5. Balance in the Construction in Process account on December 31, 2021. 6. Balance in the Construction in Process account on December 31, 2020. b. Assuming that Twister uses the percentage-of-completion method, indicate the following (in millions of dollars, rounded to three decimal places): 1. Net contract gain (loss) for 2020. 2. Net contract gain (loss) for 2021. 3. Net contract gain (loss) for 2022. 4. Balance in the Construction in Process account on December 31, 2020. 5. Balance in the Construction in Process account on December 31, 2021. 6. Balance in the Construction in Process account on December 31, 2020. 4. (15 points) The following information pertains to a firm's pension plan: Prior service cost due to 2020 amendment $72,000 PBO, January 1, 2020 $1,200,000 FMV, January 1, 2020 $2,000,000 Settlement interest rate 8% Expected return on plan assets 10% Actual return on plan assets 9% Liability loss (gain) $(42,000) Contribution to plan trustee (made at end of year) $92,000 Service cost $120,000 Payments to retired employees $36,000 a. Compute the December 31, 2020: 1. PBO 2. FMV of pension assets b. Compute the 2020 pension expense. 3. (15 points) On January 1, 2020, assume that Twister Construction Company agreed to construct an observatory for Smartmouth College for $137 million. Smartmouth College must pay $68.50 million upon signing and $34.250 million in 2021 and 2022. Expected construction costs are $20.550 million for 2020, $51.375 million for 2021, and $30.8250 million for 2022. a. Assuming that Twister uses the completed-contract method, indicate the following (in millions of dollars, rounded to three decimal places): 1. Net contract gain (loss) for 2020. 2. Net contract gain (loss) for 2021. 3. Net contract gain (loss) for 2022. 4. Balance in the Construction in Process account on December 31, 2020. 5. Balance in the Construction in Process account on December 31, 2021. 6. Balance in the Construction in Process account on December 31, 2020. b. Assuming that Twister uses the percentage-of-completion method, indicate the following (in millions of dollars, rounded to three decimal places): 1. Net contract gain (loss) for 2020. 2. Net contract gain (loss) for 2021. 3. Net contract gain (loss) for 2022. 4. Balance in the Construction in Process account on December 31, 2020. 5. Balance in the Construction in Process account on December 31, 2021. 6. Balance in the Construction in Process account on December 31, 2020. 4. (15 points) The following information pertains to a firm's pension plan: Prior service cost due to 2020 amendment $72,000 PBO, January 1, 2020 $1,200,000 FMV, January 1, 2020 $2,000,000 Settlement interest rate 8% Expected return on plan assets 10% Actual return on plan assets 9% Liability loss (gain) $(42,000) Contribution to plan trustee (made at end of year) $92,000 Service cost $120,000 Payments to retired employees $36,000 a. Compute the December 31, 2020: 1. PBO 2. FMV of pension assets b. Compute the 2020 pension expense
