What would the projected benefit obligation be

Assignment Help Finance Basics
Reference no: EM131791756

Question: Assume that the pension benefit formula of ABC Corporation calls for paying a pension benefit of $250 per year for each year of service with the company plus 50% of the projected last year's salary at retirement. Payments begin one year after the employee attains the age of 65 and are paid annually thereafter. The average life expectancy of employees is 76. The pension plan is adopted on January 1, 2014. One of the company's employees, I.M. Workaholic, is granted credit for 10 years of prior service. He is 50 years old at the date the plan is adopted. His current annual salary is $20,000, but his salary level when he retires in 15 years is expected to be $30,000. Assume a 10% rate of interest for both the discount rate and the expected rate of return on plan assets.

Required: 1. Determine the PBO and ABO related to Workaholic's pension benefits as of January 1, 2014.

2. What would the projected benefit obligation be on December 31, 2014?

3. How much pension expense should ABC Corporation recognize in 2014 for Workaholic? Show the components of pension expense.

Reference no: EM131791756

Questions Cloud

Prepare a vertical analysis on inventory and property : Foundations of Accounting Assignment. Prepare a vertical analysis on inventory, property and equipment as well as long-term liabilities and assess the results.
Priority over the claim of perfected secured party : Which of the following has priority over the claim of a perfected secured party?
Calculate the probability about the living in poverty : Calculate the probability that 30% or more of the sample will be living in poverty Assume the sample is collected in such a way that the conditions.
Html-break and paragraph tags are? similar but break tags : In? HTML, break and paragraph tags are? similar, but break tags
What would the projected benefit obligation be : Assume that the pension benefit formula of ABC Corporation calls for paying a pension benefit of $250 per year for each year of service with the company.
Would the approximate probability of passing the test : Would the approximate probability of passing the test by guessing be higher or lower than the approximate probability of passing the true/false test? Why?
Why the total pension expense differ in given requirements : On January 1, 2014, Magee Corporation started doing business by hiring R. Walker as an employee at an annual salary of $50,000, with an annual salary increment.
Management expects their rate of learning to continue : If management expects their rate of learning to continue for this product, how many total hours will be required to produce the product next year?
Design-develop and test a small procedural java program : ITECH1000 - Identify and use the correct syntax of a common programming language and Write and implement a solution algorithm using basic programming constructs

Reviews

Write a Review

Finance Basics Questions & Answers

  Develop three to four-page analysis on the projected return

Develop a three to four-page analysis on the projected return on investment for your college education and projected future employment

  Would you become an investor in this bank

Suppose that you are considering investing in a bank that is earning a higher ROE than most other banks. You learn that the bank has $300 million in capital and $5 billion in assets. Would you become an investor in this bank? Briefly explain.

  What is the forecast of the residual earnings growth rate

Maxim Inc. was traded at $36 per share in early 2015. What is the forecast of the residual earnings growth rate after 2016 that is implied in the stock price of $36?

  Difference between a fee-for-service plan

Determine a key difference between a fee-for-service plan and an episode of care payment plan, and indicate the plan that you believe to be most advantageous for the majority of patients. Provide support for your rationale.

  Differences between secured and unsecured creditors

Determine the principal differences between Secured Creditors, Unsecured Creditors, Preferred Stockholders and Common Stockholders? During a partial or complete liquidation, what is the priority of asset distribution?

  Will the company need any outside financing

Based on your cash budget findings, answer the following questions: Will the company need any outside financing? What is the minimum line of credit that CBM will need? What do you think of CBM's cash position during the budget period? Do you see any ..

  What are the p/e ratios for the competitors

Analyze your stock by answering the following questions (in paragraph form): If your stock was valued at the Industry Average P/E Ratio for these figures, what would be its stock price? What are the P/E ratios for the competitors? Is your stock cheap..

  Invest today to buy the car in two years

You have about $50 000 but the car costs $68 500. If you can earn 9 percent how much do you have to invest today to buy the car in two years?

  Financial statement analysis addressing profitability ratios

Using the company's financial statements, perform a complete 2- or 3-year financial statement analysis addressing profitability ratios, turnover control ratios, leverage and liquidity ratio, and common-size statement analysis with constructive nar..

  How many markets exist and how are they related

How many markets exist? How are they related? How many contracts exist for the utility (GENCO, etc.) and for the customer? Are there option contracts?

  What should ted decide to ask for how should he go about

ted jones the surgery unit director is about to choose his strategy for creating a capital expenditure funding proposal

  Assume that a few months earlier the forward 1-year rate of

the following table shows yields to maturity of zero-coupon treasury securities.term to maturity yearsyield to maturity

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd