ProjectedThe interest cost on the projected benefit obligation is found by multiplying what two amounts?Projected benefit obligation at the beginning of the year / assumed discount rateSelect the two factors that must be compared to calculate prior service cost.PBO balance after the plan amendment / PBO balance prior to the plan amendment. Decreases and increases in estimates of the PBO because of estimate revisions are called __________ and __________.Gains / lossesWhich of the following likely would cause gains or losses arising from changes in the PBO?Changes in employees’ life expectancy / changes in employee turnover rates / change in the assumed discount rateAdministering terminated pension plans is one purpose ofThe PBGCIdentify the pension benefit obligation that typically provides the most relevant measure of the employer’s pension obligation. The projected benefit obligationGreen Company sponsors a defined benefit pension plan. The pension formula is calculated based on the following formula: 1.5% x number of service years x final salary. The assumed discount rate it 5%. If an employee is expected to retire in 10 years with a final annual salary of $200,000, has earned 20 years of service, and is expected to receive an annual pension for 20 years, the current PBO rounded to the full dollar will be$459,041(1.5% x 20 x 200,000 = 60,000 us n = 20, I = 5% PVA 12.46221 x 60,000 = 747,732.60 use n = 10, I = 5%, PV .61391 x 747732.60)In he financial statements, prior service cost should be classified as7
ACC-309 INTERMEDIATE ACCOUNTING IIITERM 18EW6MOD 2 READING QUESTIONSAccumulated other comprehensive incomeWhich of the following may be a valid justification for the deferred recognition of pension-related gains and losses?over several periods, gains and losses may cancel out. Gains and losses related to pension plans have to be amortized if they exceed10% of the greater of the beginning balances of plan assets or the PBOWhen the PBO __________ due to a revised estimate, we have a loss on PBOIncreases8
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