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Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% service years final year's salary, payable at the end of each year.
Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.5% service years final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2010 and is expected to retire at the end of 2044 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $88,000 at the end of 2024 and the company's actuary projects her salary to be $270,000 at retirement. The actuary's discount rate is 6%. Note: Use tables, Excel, or a financial calculator. (FV of \$1, PV of \$1, FVA of \$1, PVA of \$1, FVAD of \$1 and At the beginning of 2025, the pension formula was amended to: 1.65% Service years Final year's salary The amendment was made retroactive to apply the increased benefits to prior service years. Required: 1. What is the company's prior service cost at the beginning of 2025 with respect to Davenport after the amendment described above? 2. Since the amendment occurred at the beginning of 2025, amortization of the prior service cost begins in 2025. What is the prior service cost amortization that would be included in pension expense? 3. What is the service cost for 2025 with respect to Davenport? 4. What is the interest cost for 2025 with respect to Davenport? 5. Calculate pension expense for 2025 with respect to Davenport, assuming plan assets attributable to her of $200,000 and a rate of return (actual and expected) of 10%. Note: For all requirements, do not round intermediate calculations. Round your final answers to the nearest whole dollar
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