What is a pension settlement and pension curtailment

Reference no: EM132179803

Question - Panther Company currently sponsors a defined benefit pension plan for its employees. At the end of 2016, the plan had a projected benefit obligation of $1,456,000 and fair value of plan assets of $1,629,000. Panther recognized a net pension asset in its balance sheet of $173,000 at the end of 2016. Due to the plans overfunded position, Allison Costello, panther's CFO, is interested in finding out if it is possible to settle or curtail the plan. Specifically, she is interested in purchasing a portfolio of high quality bonds that have principal and interest payment dates very similar to the estimated dates pension benefits would be paid.

Directions -

1. Research the GAAP and prepare a short memo to Allison Costello that provides guidance on the following issues:

What is a pension settlement and pension curtailment?

Can the company recognize a gain or loss if it settles its pension plan? What is the amount of the gain or loss?

Can the company recognize a gain or loss if it curtails its pension plan? What is the amount of the gain or loss?

Would Allison Costello's plan of purchasing high quality bonds qualify as a settlement of a pension plan? Why or why not?

Reference no: EM132179803

Questions Cloud

How are individuals are to be trained and developed : In human resource management, how are individuals are to be trained and developed in the company?

Conglomerate into world-leading mobile phone producer : Based in Finland, Nokia transformed from being a diverse conglomerate into a world-leading mobile phone producer in the 1990s.

What is the expected shortfall of each bond : If it does not default it is worth $100. Defaults are independent of each other. What is the 85% expected shortfall of each bond, and of the portfolio

How did your character develop the management traits : How did your character develop their management traits? Identify three management traits that the leader possesses, and explain why they are necessary.

What is a pension settlement and pension curtailment : What is a pension settlement and pension curtailment? Would Allison Costello's plan of purchasing high quality bonds qualify

Discuss the layout of the organization : Discuss the layout of the organization and how it manages bottlenecks.

What process is available should a citizen have a complaint : Choose a city in Indiana. Tell the class about the ethical aspects of your city government. What services are available?

Strategic alliances and human resource management : Explain the organization and purpose of chaebols. Identify the characteristics of LGE’s human resources strategy.

Describe what motivates you : You need to complete the interests, values and skills audits. Please use the template we have provided to complete these audits.

User Account

All Pages