Chapter 17 Spiceland 6th edition

Chapter 17 Spiceland 6th edition - Exercise 17-1 I N D I I...

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Exercise 17-1 Events I 1. Interest cost. N 2. Amortization of prior service cost. D 3. A decrease in the average life expectancy of employees. I 4. An increase in the average life expectancy of employees. I 5. A plan amendment that increases benefits is made retroactive to prior years. D 6. An increase in the actuary’s assumed discount rate. N 7. Cash contributions to the pension fund by the employer. D 8. Benefits are paid to retired employees. I 9. Service cost. N 10. Return on plan assets during the year lower than expected. N 11. Return on plan assets during the year higher than expected. Exercise 17-5 ($ in millions) Plan assets Beginning of the year $600 Actual return 48 Cash contributions 100 Less: Retiree benefits (11 ) End of the year $737 Exercise 17-7 ($ in millions) Plan assets Beginning of the year $700 Actual return 77 (11% x $700) Cash contributions ? Less: Retiree benefits (66 ) End of the year $750 Cash contributions = $750 700 77 + 66 = $39 million
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Exercise 17-8 ($ in 000s) Service cost $112 Interest cost (6% x $850) 51 Expected return on the plan assets ($99 actual, less $9 gain*) (90) Amortization of prior service cost 8 Amortization of net loss 1 Pension expense $82 * (11% x $900) – (10% x $900) Exercise 17-9 Under IFRS there is no requirement to present the various components of pension expense as a single net amount. As a result, Sterling Properties could report $82,000 pension expense as in the previous exercise, or it could report interest cost, expected return on assets, and amortization of gains and losses as financing income and expense: ($ in 000s) Service cost $112 Amortization of prior service cost 8 Pension expense $120 ($ in 000s) Financing income and expense: Interest cost (6% x $850) $ 51 Expected return on the plan assets ($99 actual, less $9 gain*) (90) Amortization of net loss 1 * (11% x $900) – (10% x $900)
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Exercise 17-10 Requirement 1 ($ in millions) Service cost $20 Interest cost 12 Expected return on the plan assets ($9 actual, less $1 gain) (8 ) Pension expense $24 Requirement 2 Pension expense (calculated above) 24 Plan assets (expected return on plan assets)
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This note was uploaded on 09/20/2011 for the course ACCT 4120 taught by Professor Franz during the Spring '11 term at Toledo.

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Chapter 17 Spiceland 6th edition - Exercise 17-1 I N D I I...

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