Su06Ch20_Solutions

Su06Ch20_Solutions - CHAPTER 20 SOLUTIONS TO EXERCISES...

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20-1 CHAPTER 20 SOLUTIONS TO EXERCISES EXERCISE 20-2 (10-15 minutes) Computation of pension expense: Service cost $ 90,000 Interest cost ($800,000 X 10%) 80,000 Actual (and expected) return on plan assets (64,000) Unrecognized prior service cost amortization 10,000 Pension expense for 2005 $116,000 EXERCISE 20-3 (15-25 minutes)
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20-2 EXERCISE 20-8 (20-25 minutes) Corridor and Minimum Loss Amortization Year Projected Benefit Obligation (a) Plan Asset Value (a) 10% Corridor Cumulative Unrecognized Net Loss (a) Minimum Amortizatio n of Loss 2003 $2,000,000 $1,900,000 $200,000 $ 0 $ 0 2004 2,400,000 2,500,000 250,000 280,000 3,000 (b) 2005 2,900,000 2,600,000 290,000 367,000 (c) 6,417 (d) 2006 3,600,000 3,000,000 360,000 370,583 (e) 882 (f) (a) As of the beginning of the year. (b) ($280,000 – $250,000) ÷ 10 years = $3,000 (c) $280,000 – $3,000 + $90,000 = $367,000 (d) ($367,000 – $290,000) ÷ 12 years = $6,417 (e) $367,000 – $6,417 + $10,000 = $370,583 (f) $370,583 – $360,000) ÷ 12 years = $882
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20-3 EXERCISE 20-10 (20-25 minutes)
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20-4 EXERCISE 20-11 (10-15 minutes) (a) Additional Liability Computations December 31 2004 2005 Accumulated benefit obligation $(260,000) $(370,000) Fair value plan of assets ( 255,000 300,000 Minimum liability (5,000) (70,000) Prepaid (accrued) pension cost 30,000 (45,000 ) Additional liability to report (35,000) (25,000) Less: Beginning additional liability (35,000 ) Additional liability to record $ (35,000 ) $ 10,000 (b) 2004 Intangible Asset—Deferred Pension Cost . ............. 35,000 Additional Pension Liability. ............................. 35,000 2005 Additional Pension Liability . .................................... 10,000 Intangible Asset—Deferred Pension Cost. ................................................................ 10,000 EXERCISE 20-16 (15-20 minutes) (a) Computation of pension expense: Service cost $ 90,000 Interest cost ($700,000 X .10) 70,000 Actual (expected) return on plan assets (15,000 ) Pension expense for 2004 $145,000 Pension Expense. .................................................. 145,000 Prepaid/Accrued Pension Cost. ........................... 5,000 Cash. ............................................................... 150,000 (b) Minimum liability computation: Accumulated benefit obligation $(400,000) Fair value of plan assets 350,000 Minimum liability (50,000) Prepaid (accrued) pension cost ($25,000 – $5,000) (20,000 ) Additional liability to report (30,000) Less: Beginning additional liability (10,000 ) Additional liability to record $ (20,000 )
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20-5 EXERCISE 20-16 (Continued) Excess of Additional Pension Liability over Unrecognized Prior Service Cost. .................... 20,000 Additional Pension Liability. ......................... 20,000
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This homework help was uploaded on 04/06/2008 for the course ACC 302 taught by Professor Ahaha during the Spring '07 term at Central Mich..

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Su06Ch20_Solutions - CHAPTER 20 SOLUTIONS TO EXERCISES...

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