Use the following information for questions 4 through 6.
The following data are for the pension plan for the employees of Lockett Company.
1/1/14 12/31/14 12/31/15
Accumulated benefit obligation $2,500,000 $2,600,000 $3,400,000
Projected benefit obligation 2,700,000 2,800,000 3,700,000
Plan assets (at fair value) 2,300,000 3,000,000 3,300,000
AOCL – net loss -0- 580,000 500,000
Settlement rate (for year) 10% 9%
Expected rate of return (for year) 8% 7%
Lockett’s contribution was $420,000 in 2015 and benefits paid were $275,000. Lockett estimates that the average remaining service life is 20 years.
4. The actual return on plan assets in 2015 was
a. $300,000.
b. $255,000.
c. $200,000.
d. $155,000.
5. Assume that the actual return on plan assets in 2015 was $245,000. The unexpected gain on plan assets in 2015 was
a. $32,000.
b. $55,000.
c. $35,000.
d. $34,000.
6. The corridor for 2015 was $300,000. The amount of AOCI-net loss amortized in 2015 was
a. $33,333.
b. $32,000.
c. $14,000.
d. $12,000.
4.
Answer d: $155,000
(3,300,000-3,000,000-420,000+275,000)
$
Plan assets at fair value on 12/31/14 3,000,000
Add: Contribution in 2015 420,000
Less: Benefit received 275,000
3,145,000
Plan assets at fair value on 12/31/14 3,300,000
155,000
Actual return on plan asset = $155,000
5.
Answer C: $35,000
$
Plan assets at fair value on 12/31/14 3,000,000
Expected rate of return @ 7% (3,000,000*0.07) 210,000
Actual Return 245,000
35,000
Unexpected gain on plan asset = $35,000
6.
Answer C: $14,000
$
Net loss on 12/31/14 580,000
The corridor for 2015 300,000
Balance (580,000-300,000) 280,000
Net loss amortized in 2015 was = $280,000 / 20 (remaining service life)
=$14,000
Get Answers For Free
Most questions answered within 1 hours.