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7) Be prepared to explain the following footnote disclosure related to defined benefit pension plans? Zarle Company Notes to the Financial Statements Note D. The

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7) Be prepared to explain the following footnote disclosure related to defined benefit pension plans? Zarle Company Notes to the Financial Statements Note D. The company has a pension plan covering substantially all of its employees. The plan is no contributory and provides pension benefits that are based on the employee's compensation during the three years imme- diately preceding retirement. The pension plan's assets consist of cash, stocks, and bonds. The company's funding policy is consistent with the relevant government (ERISA) and tax regulations. Pension expense for 2022 is comprised of the following components of pension cost. Service cost $16.000 Interest on projected benefit obligation 26,500 Expected return on plan assets (15,960) Components of pension Amortization of prior service cost 17,600 expense Amortization of net loss 172 Pension expense $44,312 Other changes in plan assets and benefit obligations recognized in other comprehensive income Net actuarial gain $6.212 Amortization of prior service cost 17,600 Amounts recognized in other Total recognized in other comprehensive income 123,812) comprehensive income Total recognized in pension expense and other comprehensive income $20.500 The estimated net actuarial loss and prior service cost for the defined benefit pension plan that will be amor- tized from accumulated other comprehensive Income into pension expense over the next year are estimated to be the same as this year. The amount recognized as a long-term liability in the balance sheet is as follows: Noncurrent liability Pension liability $98.900 The amounts recognized in accumulated other comprehensive income related to pensions consist of: Amounts recognized in the Net actuarial loss $23,728 balance sheet Prior service cost 14.400 Total $38.128 Change in benefit obligation Benefit obligation at beginning of year $265,000 Service cost 16,000 Interest cost 26.500 Amendments (Prior service cost) Actuarial gain Benefits pald (18,000) Benefit obligation at end of year 289,500 Reconciliations of pension liability and plan assets Change in plan assets Fair value of plan assets at beginning of year 159,600 Actual return on plan assets 22,000 Contributions 27.000 Benefits paid (18,000) Fair value of plan assets at end of year 190,600 Funded status (liability 98,900 b-Funded status of plan The weighted average discount rate used in determining the 2023 projected benefit obligation was 10 percent. The rate of increase in future compensation levels used in computing the 2023 projected benefit Rates used to estimate plan obligation was 4.5 percent. The weighted average expected long-term rate of return on the plan's assets was 10 percent clements Zarle Company 2020 2021 2022 2023 Components of pension expense Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of loss Pension expense $ 9,000 10,000 (10,000) -O- $ 9,500 19,200 (11,100) 27,200 $13,000 21,270 (13,410) 20,800 $16,000 26,500 (15,960) 17,600 172 $44,312 $ 9,000 $44,800 $41,660 *Note that the expected return must be disclosed, not the actual return. In 2022, the expected return is $13,410, which is the actual gain ($12,000) adjusted by the unrecognized loss ($1,410). In 2023, the expected return is $15,960, which is the actual gain ($22,000) adjusted by the unrecognized galn (6,040). Zarle Company Pension Reconciliation 2020 2021 2022 2023 $100,000 9,000 10,000 $ 212,700 13,000 21,270 Change in benefit obligation Benefit obligation at beginning of year Service cost Interest cost Amendments (Prior service cost) Actuarial loss Benefits paid Benefit obligation at end of year Change in plan assets Fair value of plan assets at beginning of year Actual return on plan assets Contributions Benefits paid Fair value of plan assets at end of year Funded status (Pension asset/liability) $112,000 9,500 19,200 80,000 -0- (8,000) 212,700 $265,000 16,000 26,500 -0- (7,000) 112,000 28,530 (10,500) 265,000 (18,000) 289,500 100,000 10,000 8,000 (7,000) 111,000 $ (1,000) 111,000 11,100 20,000 (8,000) 134,100 $ 178,600) 134,100 12,000 24,000 (10,500) 159,600 $(105,400) 159,600 22,000 27,000 (18,000) 190,500 $(98,900) 7) Be prepared to explain the following footnote disclosure related to defined benefit pension plans? Zarle Company Notes to the Financial Statements Note D. The company has a pension plan covering substantially all of its employees. The plan is no contributory and provides pension benefits that are based on the employee's compensation during the three years imme- diately preceding retirement. The pension plan's assets consist of cash, stocks, and bonds. The company's funding policy is consistent with the relevant government (ERISA) and tax regulations. Pension expense for 2022 is comprised of the following components of pension cost. Service cost $16.000 Interest on projected benefit obligation 26,500 Expected return on plan assets (15,960) Components of pension Amortization of prior service cost 17,600 expense Amortization of net loss 172 Pension expense $44,312 Other changes in plan assets and benefit obligations recognized in other comprehensive income Net actuarial gain $6.212 Amortization of prior service cost 17,600 Amounts recognized in other Total recognized in other comprehensive income 123,812) comprehensive income Total recognized in pension expense and other comprehensive income $20.500 The estimated net actuarial loss and prior service cost for the defined benefit pension plan that will be amor- tized from accumulated other comprehensive Income into pension expense over the next year are estimated to be the same as this year. The amount recognized as a long-term liability in the balance sheet is as follows: Noncurrent liability Pension liability $98.900 The amounts recognized in accumulated other comprehensive income related to pensions consist of: Amounts recognized in the Net actuarial loss $23,728 balance sheet Prior service cost 14.400 Total $38.128 Change in benefit obligation Benefit obligation at beginning of year $265,000 Service cost 16,000 Interest cost 26.500 Amendments (Prior service cost) Actuarial gain Benefits pald (18,000) Benefit obligation at end of year 289,500 Reconciliations of pension liability and plan assets Change in plan assets Fair value of plan assets at beginning of year 159,600 Actual return on plan assets 22,000 Contributions 27.000 Benefits paid (18,000) Fair value of plan assets at end of year 190,600 Funded status (liability 98,900 b-Funded status of plan The weighted average discount rate used in determining the 2023 projected benefit obligation was 10 percent. The rate of increase in future compensation levels used in computing the 2023 projected benefit Rates used to estimate plan obligation was 4.5 percent. The weighted average expected long-term rate of return on the plan's assets was 10 percent clements Zarle Company 2020 2021 2022 2023 Components of pension expense Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of loss Pension expense $ 9,000 10,000 (10,000) -O- $ 9,500 19,200 (11,100) 27,200 $13,000 21,270 (13,410) 20,800 $16,000 26,500 (15,960) 17,600 172 $44,312 $ 9,000 $44,800 $41,660 *Note that the expected return must be disclosed, not the actual return. In 2022, the expected return is $13,410, which is the actual gain ($12,000) adjusted by the unrecognized loss ($1,410). In 2023, the expected return is $15,960, which is the actual gain ($22,000) adjusted by the unrecognized galn (6,040). Zarle Company Pension Reconciliation 2020 2021 2022 2023 $100,000 9,000 10,000 $ 212,700 13,000 21,270 Change in benefit obligation Benefit obligation at beginning of year Service cost Interest cost Amendments (Prior service cost) Actuarial loss Benefits paid Benefit obligation at end of year Change in plan assets Fair value of plan assets at beginning of year Actual return on plan assets Contributions Benefits paid Fair value of plan assets at end of year Funded status (Pension asset/liability) $112,000 9,500 19,200 80,000 -0- (8,000) 212,700 $265,000 16,000 26,500 -0- (7,000) 112,000 28,530 (10,500) 265,000 (18,000) 289,500 100,000 10,000 8,000 (7,000) 111,000 $ (1,000) 111,000 11,100 20,000 (8,000) 134,100 $ 178,600) 134,100 12,000 24,000 (10,500) 159,600 $(105,400) 159,600 22,000 27,000 (18,000) 190,500 $(98,900)

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