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This problem covers two years' activity in a company's pension plan for a defined benefit plan DATE As of January 1, 2001 The Actuary reports a closing Pension Obligation of 200,000. The Plan Trustee reports 230,000 of plan assets on hand, measured at their Fair Value. Enter the Opening Balances HINT: The plan is 01/01/20 2 3 4 5 6 Senior Management renegotiates the Pension Plans. The Pension Benefits are Increased. The company must record a Prior Service Cost in the 1-Jan-20 amount of 50.000 The Actuary estimates the Annual Service Cost for 2020 as 40.000 The Actuary informs the Controller that the Settement Rate for 2020 is The Controller estimates the Interest Cost of the Pension Liability The Pension Trustee informs the Controller that the Actual Return on 30.000 cash contribution to the Pension plan. A check for this amount is sent to the Pension Trustee. The Trustee pays out $5,000 in retirement benefits to the retirees. Amortize $5,000 of the Prior Service Cost out of OCI and into the Pension Expense Use this row to record a running subtotal for the Pension Obligation and the Pension Assets held by the Plan Trustee. As of USC CHS TUT TCLUIU CIE CITY you December 31. need to bring the Pension Obligation 2001 in the Trustees YELLOY columns to the final total required by the Actuary Find that ending Total below in item 10 and work backwards to find item 9 7 8 9 10 11 Use this roy to record the entry on the Company's Balance Sheet for Pension Assets or Pension Liabilities to the right subtotal belov in 13 12 On the very last day of the year the Actuary informs the Controller that the average age of the retirees has substantially exceeded their expected life spans. The average age is 95. The Actuary informs the Controller that the Pension Obligatons will drop to 100.000 as of December 31, 2020. USe this roy to record the ending balance of the Pension Obligation on the Plan Trustee's Ledger 13 Calculate 14 15 Use this roy to record the subtotals Throughout in activity during the year for Pension 2001 Expenses, OCI and Cash FISCAL YEAR 2002 Use this line to record opening Janaury 1, 2002 balances On January 1, 2002 the Actuary informs the Controller of a Stunning report. Over 50% of the retirees aged 95 and over have died due to COYID 19. The Pension Oblgation is to be reduced by $120.000. This is the be treated as a one time unique gain or loss and is to be deferred using OCI. Report a Revised Subtotal for the operning balance as of January 1. 2002 The Annual Service cost for 2002 is $15,000 The Actuary informs the Controller that the Settlement Rate is nox 5% Calculate the ANNUAL INTEREST COST ine LUIILI Uller uewives in LUVIU Pandemic creates too much market volatlity. He adopts a new Accounting policy that an Estimated Return vill be used in estimating the Pension Expense. The estimated Return for The Plan Trustee reports an ACTUAL RETURN on plan assets of $ (5,000). The Controller was right to switch to an estimated return! This loss is uniquely caused by the pandemic. 16 17 18 19 20 21 21 The Plan Trustee reports an ACTUAL RETURN on plan assets of $ (5,000). The Controller was right to switch to an estimated return! This loss is uniquely caused by the pandemic The Company decides to make NO contribution to the Pension plan due to the unexpected death of the older retirees. The Trustee pays out $5,000 tto the retirees. The controller amortizes $5,000 of the Prior Service Cost. The controller amourtizes $2,000 as a Debit to Pension Expense for the difference between the estimated and actual return on plan assets. The controller amortizes $3,00U Into the Pension Expense related to the unexpected GAIN from the death of the retirees due to the Pandemic 22 23 24 25 26 27 Use this row to prepare the entries to Pension Assets and Pension Liabilities on the Company's Balance Sheet J58 trilTUw IU LIUID 4TBILITTg >JUILL! ZI TI LIE Pension Obligation and the Pension Assets. In 2002 unlike 2001 these are the ending balances for these two items. The actuary is making no Use this line to record the net Pension Expense, the OCI changes and the net entry to CASH 28 29 The Employer's Financial Statements Use this column to record the critical variable in question. It might be a Percentage or it might be a dollar anout. Link these items into the rorksheet columns as you feel apppriate Off Balance Sheet [Vill be in Note Disclosures] The Pension Plan managed under a Pension Trustee Plan Fund Plan Liabilities : Assets Statement of Comprehensive Income BALANCE SHEET Pension Cash {Earnings] Other Annual Pension Comprehensi Expense ve Income Pension Liablity Asset 1 2 2 3 4 5 6 7 8 8 9 10 11 0 12 13 100,000 The balance in the Plan assets will change as you fill in Column L. Calculate 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 This problem covers two years' activity in a company's pension plan for a defined benefit plan DATE As of January 1, 2001 The Actuary reports a closing Pension Obligation of 200,000. The Plan Trustee reports 230,000 of plan assets on hand, measured at their Fair Value. Enter the Opening Balances HINT: The plan is 01/01/20 2 3 4 5 6 Senior Management renegotiates the Pension Plans. The Pension Benefits are Increased. The company must record a Prior Service Cost in the 1-Jan-20 amount of 50.000 The Actuary estimates the Annual Service Cost for 2020 as 40.000 The Actuary informs the Controller that the Settement Rate for 2020 is The Controller estimates the Interest Cost of the Pension Liability The Pension Trustee informs the Controller that the Actual Return on 30.000 cash contribution to the Pension plan. A check for this amount is sent to the Pension Trustee. The Trustee pays out $5,000 in retirement benefits to the retirees. Amortize $5,000 of the Prior Service Cost out of OCI and into the Pension Expense Use this row to record a running subtotal for the Pension Obligation and the Pension Assets held by the Plan Trustee. As of USC CHS TUT TCLUIU CIE CITY you December 31. need to bring the Pension Obligation 2001 in the Trustees YELLOY columns to the final total required by the Actuary Find that ending Total below in item 10 and work backwards to find item 9 7 8 9 10 11 Use this roy to record the entry on the Company's Balance Sheet for Pension Assets or Pension Liabilities to the right subtotal belov in 13 12 On the very last day of the year the Actuary informs the Controller that the average age of the retirees has substantially exceeded their expected life spans. The average age is 95. The Actuary informs the Controller that the Pension Obligatons will drop to 100.000 as of December 31, 2020. USe this roy to record the ending balance of the Pension Obligation on the Plan Trustee's Ledger 13 Calculate 14 15 Use this roy to record the subtotals Throughout in activity during the year for Pension 2001 Expenses, OCI and Cash FISCAL YEAR 2002 Use this line to record opening Janaury 1, 2002 balances On January 1, 2002 the Actuary informs the Controller of a Stunning report. Over 50% of the retirees aged 95 and over have died due to COYID 19. The Pension Oblgation is to be reduced by $120.000. This is the be treated as a one time unique gain or loss and is to be deferred using OCI. Report a Revised Subtotal for the operning balance as of January 1. 2002 The Annual Service cost for 2002 is $15,000 The Actuary informs the Controller that the Settlement Rate is nox 5% Calculate the ANNUAL INTEREST COST ine LUIILI Uller uewives in LUVIU Pandemic creates too much market volatlity. He adopts a new Accounting policy that an Estimated Return vill be used in estimating the Pension Expense. The estimated Return for The Plan Trustee reports an ACTUAL RETURN on plan assets of $ (5,000). The Controller was right to switch to an estimated return! This loss is uniquely caused by the pandemic. 16 17 18 19 20 21 21 The Plan Trustee reports an ACTUAL RETURN on plan assets of $ (5,000). The Controller was right to switch to an estimated return! This loss is uniquely caused by the pandemic The Company decides to make NO contribution to the Pension plan due to the unexpected death of the older retirees. The Trustee pays out $5,000 tto the retirees. The controller amortizes $5,000 of the Prior Service Cost. The controller amourtizes $2,000 as a Debit to Pension Expense for the difference between the estimated and actual return on plan assets. The controller amortizes $3,00U Into the Pension Expense related to the unexpected GAIN from the death of the retirees due to the Pandemic 22 23 24 25 26 27 Use this row to prepare the entries to Pension Assets and Pension Liabilities on the Company's Balance Sheet J58 trilTUw IU LIUID 4TBILITTg >JUILL! ZI TI LIE Pension Obligation and the Pension Assets. In 2002 unlike 2001 these are the ending balances for these two items. The actuary is making no Use this line to record the net Pension Expense, the OCI changes and the net entry to CASH 28 29 The Employer's Financial Statements Use this column to record the critical variable in question. It might be a Percentage or it might be a dollar anout. Link these items into the rorksheet columns as you feel apppriate Off Balance Sheet [Vill be in Note Disclosures] The Pension Plan managed under a Pension Trustee Plan Fund Plan Liabilities : Assets Statement of Comprehensive Income BALANCE SHEET Pension Cash {Earnings] Other Annual Pension Comprehensi Expense ve Income Pension Liablity Asset 1 2 2 3 4 5 6 7 8 8 9 10 11 0 12 13 100,000 The balance in the Plan assets will change as you fill in Column L. Calculate 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29