Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1 . 4 % times service years times final year's salary,

Sachs Brands's defined benefit pension plan specifies annual retirement benefits equal to 1.4%\times service years \times 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 $82,000 at the end of 2024 and the company's actuary projects her salary to be $240,000 at retirement. The actuary's discount rate is 8%.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
At the beginning of 2025, the pension formula was amended to:
1.55%\times Service years \times Final year's salary
The amendment was made retroactive to apply the increased benefits to prior service years.
Required:
What is the company's prior service cost at the beginning of 2025 with respect to Davenport after the amendment described above?
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?
What is the service cost for 2025 with respect to Davenport?
What is the interest cost for 2025 with respect to Davenport?
Calculate pension expense for 2025 with respect to Davenport, assuming plan assets attributable to her of $100,000 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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Control Systems

Authors: Frank G.H. Hartmann Professor, Kalle Kraus, Göran Nilsson, Robert N. Anthony, Vijay Govindarajan

2nd Edition

1526848317, 978-1526848314

More Books

Students also viewed these Accounting questions

Question

=+f) Are any six points in a row increasing (or decreasing)?

Answered: 1 week ago

Question

How flying airoplane?

Answered: 1 week ago