Question

The present value of vested benefits of employees at present pay levels is $7,000,000 and at...

The present value of vested benefits of employees at present pay levels is $7,000,000 and at future pay levels is $8,000,000. The present value of non-vested benefits of employees at present pay levels is $14,000,000 and at future pay levels is $16,000,000. What is the accumulated benefit obligation of this company

a.

$7,000,000
b.

$16,000,000
c.

$8,000,000
d.

$24,000,000
e.

$21,000,00
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Accumulated benefit Obligation (ABO) is the approximate amount of company's pension plan liability at a given point of time.

In ABO it is assumed that pension plan to be terminated immediately, so it doesn't consider any future salary hikes & non vested benefits as it is not payable today.

So ABO of the company = present value of vested benefits of employees at present pay levels i.e. $7,000,000

Option A is correct.

-----------------------------------------------------

Kindly hit Like button if you are satisfied with the answer.

For any Queries Kindly drop a comment.

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
At the end of 2016, its first year of operations, Dawson Corp. Prepared the following reconciliation...
At the end of 2016, its first year of operations, Dawson Corp. Prepared the following reconciliation between the pre-tax accounting income and taxable income: Pre-tax accounting income                   $300,000 Estimated lawsuit expense                    750,000 Instalment sales                                   (600,000) Taxable Income                                    $450,000 The estimated law suit expense of $750,000 will be deductible in 2018 when it is expected to be paid. The instalment sales will be realized at $300,000 in each of the next two years. The income tax rate is 30%...
Titan Corporation has a defined benefit pension plan. One of its employees has vested benefits under...
Titan Corporation has a defined benefit pension plan. One of its employees has vested benefits under the plan, which will pay her $49,000 annually for life starting with the first $49,000 payment on the day she retires at the age of 65. The employee has just reached the age of 45. Titan consulted standard mortality tables to come up with a life expectancy of 80 for this employee. The implicit interest rate under the plan is 9%. (FV of $1,...
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has...
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been with the firm since its inception at the beginning of 2017. As of the end of 2018, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $56,000. Each of the employees will become fully eligible for benefits after 26 more years of service but aren’t expected to retire...
Thinken Technology recently merged with College Electronics (CE), a computer graphics company. In performing a comprehensive...
Thinken Technology recently merged with College Electronics (CE), a computer graphics company. In performing a comprehensive audit of CE's accounting system, Gerald Ott, internal audit manager for Thinken Technology, discovered that the new subsidiary did not record pension assets and liabilities, subject to GAAP. The net present value of CE's pension assets was $15.5 million, the vested benefit obligation was $12.9 million, and the projected benefit obligation was $17.4 million. Ott reported this audit finding to Julie Habbe, the newly...
Alpha Company sponsors a defined benefit plan covering all employees. Benefits are based on years of...
Alpha Company sponsors a defined benefit plan covering all employees. Benefits are based on years of service and compensation levels at the time of retirement. Alpha’s December 31, 2020, trial balance included a project-ed benefit obligation balance of $983,000, adjusted for an actuarially determined pension loss due to projected changes in interest rates. Assuming service cost of $155,000, discount rate of 5% applicable during the year (prior to the change in rates), benefit payments of $118,000, and a January 1,...
Bonita Company sponsors a defined benefit pension plan for its employees. The following data relate to...
Bonita Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2020 in which no benefits were paid. 1. The actuarial present value of future benefits earned by employees for services rendered in 2020 amounted to $56,300. 2. The company’s funding policy requires a contribution to the pension trustee amounting to $136,404 for 2020. 3. As of January 1, 2020, the company had a projected benefit obligation...
The following data are for the pension plan for the employees of Lockett Company.                             &nbs
The following data are for the pension plan for the employees of Lockett Company.                                                                           1/1/20               12/31/20            12/31/21 Accumulated benefit obligation                  $5,000,000         $5,200,000         $6,800,000 Projected benefit obligation                          5,400,000           5,600,000           7,400,000 Plan assets (at fair value)                               4,600,000           6,000,000           6,600,000 AOCL – net loss                                                       -0-              960,000           1,000,000 Settlement rate (for year)                                                                  10%                      9% Expected rate of return (for year)                                                        8%                      7% Lockett’s contribution was $840,000 in 2021 and benefits paid were $750,000. Lockett estimates that the average remaining service life is 15...
Question 1. ABC has a post-retirement medical plan that provides medical care and life insurance benefits...
Question 1. ABC has a post-retirement medical plan that provides medical care and life insurance benefits to employees who render 5 years of service and attain age 55 while in service. At the end of 2013, employee A is 46. She was hired at age 26 and is expected to retire at age 62. The expected post-retirement benefit obligation (EPBO) for employee A at the end of 2013 is $23160. For employee A calculate the following: a. Attribution period is:...
Hey. I was trying to figure out this problem but wasn't sure what the correct answer...
Hey. I was trying to figure out this problem but wasn't sure what the correct answer is. I would appreciate it. Thank you. How do you calculate projected benefit obligation (PBO)? A. Use the present value of expected retirement annuity payments, earned by the empolyee so far B. Use the undiscounted sum of all future retirement payments C. Use the present value of vested retirement payments
The following questions relate to the concept of present value. a. Find the present value of...
The following questions relate to the concept of present value. a. Find the present value of $1000 to be paid 3 years in the future if the interest rate is 5%. b. Find the present value of $1000 to be paid in 5 years in the future if the interest rate is 5%? c. What do you notice about the relationship between time and present value? The further into the future a payment (or event) occurs, what happens to the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT