Reference no: EM133094857
Question 1 - Raphael Inc. provides a defined benefit plan for its employees, and reports using ASPE. The pension plan administrator for Raphael Inc. provided the following information for the year ended December 31, 2020
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Fair value of plan assets, January 1
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760,000
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Defined benefit obligation, January 1
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820,000
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Current service cost
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60,000
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Employer contributions
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85,000
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Benefits paid to retirees
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50,000
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Actual and expected return
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12,000
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Interest (discount) rate
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6%
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Required -
A. Distinguish between defined contribution and defined benefit plans?
B. The fair value of the plan assets at December 31, 2020 would be?
Question 2 - Pension plan calculations - The following information relates to the defined benefit pension plan for Strawberry Dale Ltd.:
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Dec 31/19
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Dec 31/20
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Defined benefit obligation
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$2,250,000
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$3,000,000
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Fair value of plan assets
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2,300,000
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2,640,000
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Interest rate
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8%
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8%
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Expected rate of return
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7%
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6%
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In 2020, the corporation contributed $ 390,000 to the plan, and the trustee paid $ 210,000 in benefits to retirees.
Required - For the year ended December 31, 2020
a) Calculate the interest on the obligation.
b) Calculate the actual return on plan assets.
c) Calculate the unexpected gain or loss (if any).
Question 3 - Pension plan calculations and journal entries - On January 1, 2020, Prune Ltd. reported the following balances relating to their defined benefit pension plan:
Defined benefit obligation $3,200,000
Fair value of plan assets 3,200,000
Other data related to the pension plan for 2020 are:
Current service cost 140,000
Contributions to the plan 204,000
Benefits paid 220,000
Actual return on plan assets 192,000
Interest (discount) rate 9%
Required -
a) Calculate the defined benefit obligation at December 31, 2020.
b) Calculate the fair value of plan assets at December 31, 2020.
c) Calculate pension expense for 2020.
d) Prepare the journal entries to record the pension expense and the contributions for 2020.
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: In 2020, the corporation contributed $ 390,000 to the plan, and the trustee paid $ 210,000 in benefits to retirees. Calculate the interest on the obligation
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