Question

What happens to pension expens e if a comapny expected a higher rateofreturn on their plan...

What happens to pension expens e if a comapny expected a higher rateofreturn on their plan assets?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Company always expects higher rate of return on its assets.
Rate of return on assets means the income earned from investments made, in form of dividends, interest etc. ( Investments here are assets of the company)

Company always plans assets to earn rate of return which are used for pension plan of the employees.

Now, if the comapny expected a higher rate of return on their plan asset, then the pension expenses will be lowered.
These pension expenses are paid from the return earned from assets.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Fiduciary net position of a pension plan equals? Pension plan assets ‒ plan liabilities Pension plan...
Fiduciary net position of a pension plan equals? Pension plan assets ‒ plan liabilities Pension plan assets + plan deferred outflows of resources ‒ total pension liability ‒ plan deferred inflows of resources Total pension liability ‒ pension plan assets Pension plan assets + plan deferred outflows of resources ‒ plan liabilities ‒ plan deferred inflows of resources
Marin Company sponsors a defined benefit pension plan. The following information related to the pension plan...
Marin Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2020 and 2021. 2020 2021 Plan assets (fair value), December 31 $754,920 $916,920 Projected benefit obligation, January 1 756,000 864,000 Pension asset/liability, January 1 151,200 Cr. ? Prior service cost, January 1 270,000 259,200 Service cost 64,800 97,200 Actual and expected return on plan assets 25,920 32,400 Amortization of prior service cost 10,800 12,960 Contributions (funding) 124,200 129,600 Accumulated benefit obligation,...
Coronado Company sponsors a defined benefit pension plan. The following information related to the pension plan...
Coronado Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2020 and 2021. 2020 2021 Plan assets (fair value), December 31 $733,950 $891,450 Projected benefit obligation, January 1 735,000 840,000 Pension asset/liability, January 1 147,000 Cr. ? Prior service cost, January 1 262,500 252,000 Service cost 63,000 94,500 Actual and expected return on plan assets 25,200 31,500 Amortization of prior service cost 10,500 12,600 Contributions (funding) 120,750 126,000 Accumulated benefit obligation,...
Longfellow Group maintains a defined-benefit pension plan for all its domestic employees. The projected bene obligation...
Longfellow Group maintains a defined-benefit pension plan for all its domestic employees. The projected bene obligation (PBO) was determined using a discount rate of 7%. The expected rate of compensation growth is 5%, and the expected rate of return on plan assets is 15%. The pension plan is currently over-funded. 1.Indicate (higher, lower, no effect) and briefly explain the effect of an decrease in the discount rate on: a.The PBO in the year of change b.Pension cost in the year...
ABC Group maintains a defined-benefit pension plan for all its domestic employees. The projected bene obligation...
ABC Group maintains a defined-benefit pension plan for all its domestic employees. The projected bene obligation (PBO) was determined using a discount rate of 7%. The expected rate of compensation growth is 5%, and the expected rate of return on plan assets is 15%. The pension plan is currently over-funded. 1.Indicate (higher, lower, no effect) and briefly explain the effect of an decrease in the discount rate on: a.The PBO in the year of change b.Pension cost in the year...
Pension data for Manu Services Inc. include the following: Discount rate 8% Expected return on plan...
Pension data for Manu Services Inc. include the following: Discount rate 8% Expected return on plan assets 9% Actual return on plan assets 10% Service cost, 2016 225,650 Accumulated benefit obligation 1/1/16 1,590,100 Projected benefit obligation 1/1/16 2,468,070 Plan assets (fair value) 1/1/16 2,864,890 Prior service cost–AOCI 1/1/16 302,439 Net gain–AOCI 1/1/16 261,276 2016 Cash contributions to pension fund 320,380 2016 Benefit payments to retirees 274,275 On average, employees' remaining service life with the company is 10 years When recording...
The return on plan assets component of a defined benefit pension plan expense is computed as...
The return on plan assets component of a defined benefit pension plan expense is computed as the ending liability times the future earning rate of the plan. ending liability times the current earning rate of the plan. beginning liability times the assumed earning rate of the plan. beginning plan assets times the expected earning rate of the plan.
Swifty Company sponsors a defined benefit pension plan. The following information related to the pension plan...
Swifty Company sponsors a defined benefit pension plan. The following information related to the pension plan is available for 2017 and 2018. 2017 2018 Plan assets (fair value), December 31 $810,840 $984,840 Projected benefit obligation, January 1 812,000 928,000 Pension asset/liability, January 1 162,400 Cr. ? Prior service cost, January 1 290,000 278,400 Service cost 69,600 104,400 Actual and expected return on plan assets 27,840 34,800 Amortization of prior service cost 11,600 13,920 Contributions (funding) 133,400 139,200 Accumulated benefit obligation,...
The following facts apply to the pension plan of Sandhill Inc. for the year 2017. Plan...
The following facts apply to the pension plan of Sandhill Inc. for the year 2017. Plan assets, January 1, 2017 $524,400 Projected benefit obligation, January 1, 2017 524,400 Settlement rate 8 % Service cost 42,000 Contributions (funding) 25,000 Actual and expected return on plan assets 45,400 Benefits paid to retirees 32,900 Using the preceding data, compute pension expense for the year 2017. As part of your solution, prepare a pension worksheet that shows the journal entry for pension expense for...
1) The interest component included in pension expense for a defined-benefit pension plan represents the Select...
1) The interest component included in pension expense for a defined-benefit pension plan represents the Select one: shortage between the expected and actual returns on plan assets. increase in the projected benefit obligation due to the passage of time. increase in the fair value of plan assets due to the passage of time. amortization of the discount on accumulated OCI (PSC). 2) Frank has accepted a new job which gives him the choice between a defined-benefit and a defined contribution...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT