Year 0 On December 31, 2010, Arrieta Incorporated purchases a subsidiary of Sales Unlimited. Sales has a defined benefit pension plan. The actuary provides you the following information: 12/31/2010 (000s) 2,700 2,600 Statement of financial position Benefit obligation Fair value of plan assets Funded status 12/31/2010 Expected impact of plan alignment (100) 360 The initial amount (in 000s) to be recognized on the books of Arrieta for initial recognition of the funded status of the Sales pension plan is: Benefit obligation Fair value of plan assets Funded status 12/31/2010 2,700 2,600 (100) Year 1 On July 1, 2011 Arrieta amends the plan to align the benefits with its own plans, retroactive to the date of employment for the acquired employees. The retroactive benefits result in a prior service cost. The remaining service lives of those employees (average time to retirement) is 12 years. The actuary presents you with the following information (in 000s) as of 12/31/2011 100 105 182 20 Service cost Interest cost Expected return on plan assets Actuarial gain/(loss) Plan amendment Actual return on plan assets Benefits paid Employer contributions 360 150 (75) 35 Discount rate Expected return Salary increases 1/1/2011 3.75% 7.00% 4.00% 12/31/2011 4.00% 7.00% 4.00% Required (18 pts): a) Prepare the disclosure for the change in plan obligation and the change in plan assets for the year and determine the ending funded status. b) Prepare the disclosure for the net period benefit cost (i.e., pension expense) for the period. c) Describe how you will account for prior service costs (i.e. Prepare the disclosure of Prior Service Cost AOIC). Provide ASC references to support the accounting for the prior service cost. d) Determine the amount of any amortization of gains and losses for the following year. Provide ASC references to support the calculation. Year 0 On December 31, 2010, Arrieta Incorporated purchases a subsidiary of Sales Unlimited. Sales has a defined benefit pension plan. The actuary provides you the following information: 12/31/2010 (000s) 2,700 2,600 Statement of financial position Benefit obligation Fair value of plan assets Funded status 12/31/2010 Expected impact of plan alignment (100) 360 The initial amount (in 000s) to be recognized on the books of Arrieta for initial recognition of the funded status of the Sales pension plan is: Benefit obligation Fair value of plan assets Funded status 12/31/2010 2,700 2,600 (100) Year 1 On July 1, 2011 Arrieta amends the plan to align the benefits with its own plans, retroactive to the date of employment for the acquired employees. The retroactive benefits result in a prior service cost. The remaining service lives of those employees (average time to retirement) is 12 years. The actuary presents you with the following information (in 000s) as of 12/31/2011 100 105 182 20 Service cost Interest cost Expected return on plan assets Actuarial gain/(loss) Plan amendment Actual return on plan assets Benefits paid Employer contributions 360 150 (75) 35 Discount rate Expected return Salary increases 1/1/2011 3.75% 7.00% 4.00% 12/31/2011 4.00% 7.00% 4.00% Required (18 pts): a) Prepare the disclosure for the change in plan obligation and the change in plan assets for the year and determine the ending funded status. b) Prepare the disclosure for the net period benefit cost (i.e., pension expense) for the period. c) Describe how you will account for prior service costs (i.e. Prepare the disclosure of Prior Service Cost AOIC). Provide ASC references to support the accounting for the prior service cost. d) Determine the amount of any amortization of gains and losses for the following year. Provide ASC references to support the calculation
