On January 1, 20X1, Cello Co. established a defined benefit pension plan for its estimated the service cost for 20X1 to be $45,000. At January 1, 20X2, it estim $49,000. On the plan inception date, prior service credit was granted to emplo between the company's formation and plan inception. The prior service cost w January 1, 20X1. Cello uses a 10% discount rate and assumes a return on plan a service life of employees is 20 years, and the company will fund at the end of e cost plus interest cost for 20X1 and 20X2. December 31, 20X2 20X1 PBO ? ? Benefits paid at 12/31 2,000 Fair value of plan assets Contributions at 12/31 Actual return on plan assets ? ? 3,200

On January 1, 20X1, Cello Co. established a defined benefit pension plan for its estimated the service cost for 20X1 to be $45,000. At January 1, 20X2, it estim $49,000. On the plan inception date, prior service credit was granted to emplo between the company's formation and plan inception. The prior service cost w January 1, 20X1. Cello uses a 10% discount rate and assumes a return on plan a service life of employees is 20 years, and the company will fund at the end of e cost plus interest cost for 20X1 and 20X2. December 31, 20X2 20X1 PBO ? ? Benefits paid at 12/31 2,000 Fair value of plan assets Contributions at 12/31 Actual return on plan assets ? ? 3,200

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 6E

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On January 1, 20X1, Cello Co. established a defined benefit pension plan for its employees. At January 1, 20X1, Cello estimated the service cost for 20X1 to be $45,000. At January 1, 20X2, it estimated 20X2 service cost to be $49,000. On the plan inception date, prior service credit was granted to employees for five years, the period of time between the company’s formation and plan inception. The prior service cost was estimated to be $650,000 at January 1, 20X1. Cello uses a 10% discount rate and assumes a return on plan assets of 9%. The average remaining service life of employees is 20 years, and the company will fund at the end of each year an amount equal to service cost plus interest cost for 20X1 and 20X2. December 31, 20X2 20X1 PBO ? ? Benefits paid at 12/31 2,000 0 Fair value of plan assets ? 0 Contributions at 12/31 ? ? Actual return on plan assets 3,200 0 Required: 6-a. Compute the amount of prior service…
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