Reference no: EM132956939

You are the auditor of Carla Vista Inc., the Canadian subsidiary of a public multinational engineering company that offers a defined benefit pension plan to its eligible employees. Employees are permitted to join the plan after two years of employment, and benefits vest immediately.

You have received the following information from the fund trustee for the year ended December 31, 2020:

Discount rate 5%

Rate of compensation increase 3%

Defined benefit obligation at January 1, 2020  $11,314,720

Current service cost                                465,080

Interest cost                                                565,736

Benefits paid                                                  752,854

Actuarial loss, end of period                                 655,713

Plan Assets

Fair value of plan assets at January 1, 2020                9,200,740

Actual return on plan assets, net of expenses                    1,221,470

Employer contributions                                                        530,417

Employee contributions                                                         78,150

Benefits paid                                                                        752,854

Other relevant information:

1.The net defined benefit liability on January 1, 2020, is $2,113,980.

2.Employee contributions to the plan are withheld as payroll deductions, and are remitted to the pension trustee along with the employer contributions.

Problem 1: Prepare a pension work sheet for the company.