Question
Kaa & Shere Khan Company has a non-contributory, defined benefit pension plan. Kaas incremental borrowing rate is 7%. The accounting period ends 31 December 2020.
Kaa & Shere Khan Company has a non-contributory, defined benefit pension plan. Kaas incremental borrowing rate is 7%. The accounting period ends 31 December 2020. Pension plan data to be used for accounting purposes in 2020 are as follows:
Fair value of plan assets, Dec 31, 2019 $6,258,000
Defined benefit obligation, Dec 31, 2019 $7,299,000
Actual return on plan assets for 2020 $61,100
Actuarial revaluation dated Dec 31, 2020 $(806,900)
(due to mortality assumption changes)
Funding payment at year end 2020 $250,000
Benefits paid to retirees in 2020 $105,000
Current service cost for 2020 $233,400
Required:
- Calculate the net defined benefit pension liability as of Dec 31, 2019.
- Calculate the net defined benefit pension liability as of Dec 31, 2020 by calculating the defined benefit obligation and the fair value of plan assets as at Dec 31, 2020.
A friend of yours is confused because she cannot find the pension assets or the accrued obligation on Kaa & Shere Khan Companys most recent financial statements. She asks you to explain.
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