Explore BrainMass
Share

Stanley-Morgan Industries adopted a defined benefit pension

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 20xx. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as a trustee for the plan assets, expects plan assets to earn a 10% rate of return. A consulting firm, engaged as an actuary, recommends 6% as the appropriate discount rate. The service cost is $150,000 for 20xx and $200,000 for 20xz. Year-end funding is $160,000 for 20xx and $170,000 for 20xz. No assumptions or estimates were revised during 20xx.
Required - Calculate each of the following amounts as of both December 31, 20xx and December 31, 20xz:
1.) Projected benefit obligation, 2.) Plan assets, 3.) pension expense, 4.) net pension asset or net pension liability

© BrainMass Inc. brainmass.com March 21, 2019, 9:49 pm ad1c9bdddf
https://brainmass.com/business/accounting/stanley-morgan-industries-adopted-a-defined-benefit-pension-393416

Solution Preview

Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 20xx. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as a trustee for the ...

Solution Summary

Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 20xx. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as a trustee for the plan assets, expects plan assets to earn a 10% rate of return. A consulting firm, engaged as an actuary, recommends 6% as the appropriate discount rate. The service cost is $150,000 for 20xx and $200,000 for 20xz. Year-end funding is $160,000 for 20xx and $170,000 for 20xz. No assumptions or estimates were revised during 20xx.
Required - Calculate each of the following amounts as of both December 31, 20xx and December 31, 20xz:
1.) Projected benefit obligation, 2.) Plan assets, 3.) pension expense, 4.) net pension asset or net pension liability

$2.19