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Solution to Assignment #3 - Continuity Schedules

# Solution to Assignment #3 - Continuity Schedules - SOLUTION...

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Page 1 of 4 SOLUTION TO ASSIGNMENT #3 Continuity Schedules a) Continuity schedule for the plan assets for 2008 Beginning plan assets value (January 1) \$460,700 + Cash contributions 148,000 + Expected return 27,642* Benefit payments to retirees (72,000) +/ − Actuarial gain / loss 13,758** Ending plan assets value (December 31) \$578,100 * Expected return = beginning plan assets × expected rate of return = 460,700 × 6% ** Actuarial gain/loss (asset gain/loss) = Actual return 41,400 - expected return 27,642 b) Continuity schedule for the ABO for Beginning ABO (Jan. 1) \$ 582,400 +/ past service cost N/A + current service cost 80,500 + interest cost 40,768 * − benefit paid to retirees (72,000) /+ actuarial gain / loss Ending ABO (Dec. 31) N/A \$ 631,668 * Interest cost = B.B. of ABO 582,400 × 7%

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Page 2 of 4 (c) Pension expense for 2008 + Current service cost \$80,500 + Interest cost (from b) 40,768 Expected return on plan assets (from a) (27,642) +/ − Amortization of PSC
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Solution to Assignment #3 - Continuity Schedules - SOLUTION...

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