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+--- Thread: Pension Accounting (/thread-pension-accounting)
Pension Accounting - andrei2209 - 02-05-2009
I need help with this problem.
My guess is that the answer is e), as we are not provided with the unamortized past service cost. But maybe there is a way to find it and I don't see it...
Thank you!
Phoenix Ltd. has provided you with the following information relating to their defined
benefit pension plan for the year ended December 31, 2008.
Current service cost $40,000
Accrued interest on Accrued Benefit Obligation @5.5% $45,500
Benefits paid to retirees $37,750
Expected return on plan assets @ 4.5% $18,540
Contributions to plan $72,000
EARSL 10 years
Pension Account â January 1, 2008 200,000 cr.
Actual Return rate 4.00%
Accrued Benefit Obligation balance at December 31, 2008 as
provided by actuary
$885,500
Based on this information what is the ending balance in the accumulated actuarial
gains/losses (round all amounts to the nearest whole dollar)?
a. $210,435
b. $214,555
c. $241,065
d. $230,985
e. Answer cannot be determined from the information provided
- Muhammad Amir - 02-06-2009
Check you question once again. I think you are missing ending balance of Plan assets. However, under current information, Actiarial Loss of $637,750 ([200,000+40,000+45,500-37,750] - 885,500) arises. Opening balance of plan assets is => ([18,540/4.5%]=>$412,000), but I am unable to compute its closing balance. Paragraph 105 seems to me apply in computation of Actuarial losses/gains on Plan assets. See what Mr Kamran suggests?
Wassalam
- andrei2209 - 02-06-2009
Thanks for the reply Muhammad!
I actually don't have problems calculating the accrued obligation or the pension plan assets. This is what I have
ABO
Beginning (plugged) 827,273
Accrued interest 45,500
Current service cost 40,000
Benefits paid (37,750)
Actuarial loss(plugged) 10,477
Ending balance 885,500
Plan assets
Begging(plugged) 412,000
Expected returns 18,540
Experience loss (2,060)
Contributions 72,000
Benefits paid (37,750)
Ending balance 462,730
Now if I try to reconcile the beginning balances I have
ABO 827,273
PPA (412,000)
Pension account (200,000)
So I have a 215,273 unrecognized liability, and this should reconcile with an unamortized plan amendment( I assume there is one) plus other unrecognized amounts from previous experience gains/losses and actuarial revaluation(called here actuarial gains/losses).
And this is where my problem is. If I would know what the unamortized plan amendment or the actuarial gains/losses were at the beginning of the period it would be easy.
Is there any way I can find that with the given information?
Thank you again!