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QUESTION 5 Bathworks Corp. has a defined benefit pension plan covering its 75 employees. Bathworks agrees to amend its pension benefits as of January 1,
QUESTION 5 Bathworks Corp. has a defined benefit pension plan covering its 75 employees. Bathworks agrees to amend its pension benefits as of January 1, 2020. As a result, the projected benefit obligation increased by $2,475,000. Bathworks projects that 20% of its current employees will turnover each of the next five years (i.e., Bathworks expects to have all 75 of its current employees for 2020, but only 60 remaining for 2021, 45 for 2022, 30 for 2023, and 15 for 2024). Assuming that Bathworks uses the years-of- service method of amortization for prior service cost, the amount of amortization of prior service cost for 2020 is $33,000 $495,000 O $600,000 $825,000 QUESTION 6 The information below relates to Skywave Corp. as of December 31, 2020: Projected benefit obligation Accumulated OCI -net actuarial loss Accumulated OCI -prior service costs $900,000 300,000 405,000 The amount for the prior service cost is related to an increase in benefits stemming from an earlier plan amendment. The net actuarial loss stems from differences between actual and expected returns on plan assets. The fair value of the pension plan assets at December 31, 2020 is $930,000. The pension asset / liability reported on Skywave's balance sheet at December 31, 2020 is O Pension asset of $435,000 O Pension asset of $30,000 O Pension liability of $270,000 O Pension liability of $375,000 O Pension liability of $675,000
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